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Topic: "Wage & hour laws" | Main

Pharma sales reps are FLSA exempt as outside salesmen (5-4)
June 18, 2012 by Ross Runkel at LawMemo

This morning the US Supreme Court decided - on a 5-4 vote - that pharmaceutical sales representatives are "outside salesmen" and therefore exempt from overtime under the Fair Labor Standards Act. The Court also unanimously held that the Department of Labor's recently-announced contrary interpretation was entitled to exactly zero deference.

Christopher v. SmithKline Beacham (US Supreme Ct 06/18/2012)

Christopher, a pharmaceutical sales representative, sued the employer for violation of the Fair Labor Standards Act (FLSA) alleging failure to pay overtime. The trial court granted the employer's motion for summary judgment and denied Christopher's motion to amend the judgment based on the trial court's failure to consider an amicus brief filed by the Secretary of the Department of Labor (DOL). The 9th Circuit affirmed. The US Supreme Court affirmed (5-4).

The job of a pharmaceutical sales representative is to try to persuade physicians to write prescriptions for products in appropriate cases. For over 70 years DOL acquiesced in an interpretation that they were "outside salesmen" who are exempt from FLSA overtime requirements. In amicus briefs filed in Circuit courts DOL took the position that a "sale" requires a "consummated transaction." In Supreme Court briefing DOL's position was that there is no "sale" unless the employee "actually transfers title."

The Court said that the DOL's new interpretation is entitled to no deference at all because it would impose massive liability for conduct that occurred before the interpretation was announced, there had been no enforcement actions suggesting the industry was acting unlawfully, DOL gave no opportunity for public comment, and the interpretation is "flatly inconsistent" with the FLSA.

The FLSA definition of "sale" includes consignments, which do not involve a transfer of title. Although DOL regulations say that sales include the transfer of title, that does not mean a sale must include a transfer of title. The regulations also use the phrase "other disposition" which - in this unique regulatory environment - includes the work of pharmaceutical sales representatives. The representatives also bear all the exterior indicia of salesmen (average salaries exceeding $70,000, work that is difficult to standardize to a particular time frame, etc.)

The DISSENT reasoned that sales of drugs are made by pharmacists, not pharmaceutical sales representatives. The pharmaceutical sales representative neither make sales nor promote "their own sales." (The dissent agreed that the DOL's current views expressed in briefs are not entitled to any weight.)



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California employers must "provide" meal breaks, but need not "ensure" employees take them
April 12, 2012 by Ross Runkel at LawMemo

Here it is: Brinker v. Superior Court (California 04/12/2012):

Employee Hohnbaum brought a class action claiming violations of California Labor Code Sections 226.7 and 512, and California Industrial Welfare Commission Wage Order No. 5. The trial court granted a motion for class certification. The Court of Appeal reversed, concluding that the trial court erred in granting class certification without first considering the elements of Hohnbaum's claims. The California Supreme Court held that trial courts usually are not required as a matter of law to resolve such threshold disputes over the elements of a claim, but went ahead and resolved some of them anyhow.

(1) Meal breaks.

The most significant issue deals with the employer's duty to provide meal breaks. The court said,

"We conclude an employer's obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done." "The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so." "The employer is not obligated to police meal breaks and ensure no work thereafter is performed."

(2) Meal break timing.

The court concluded that,

"absent waiver, section 512 requires a first meal period no later than the end of an employee's fifth hour of work, and a second meal period no later than the end of an employee's 10th hour of work," and that "Wage Order No. 5 does not impose additional timing requirements."

(3) Rest breaks.

Wage Order No. 5 is interpreted as meaning that "an employee would receive no rest break time for shifts of two hours or less, 10 minutes for shifts lasting more than two hours up to six hours, 20 minutes for shifts lasting more than six hours up to 10 hours, and so on." The court rejected the idea that employees are entitled to a rest period before any meal period.

(4) Class certification.

The court remanded the certification of the meal break subclass, upheld certification of a rest break subclass, and rejected certification of an off-the-clock subclass.



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Christopher v. SmithKline Beecham - update
February 09, 2012 by Ross Runkel at LawMemo

Christopher v. SmithKline Beecham Corp. (11-204) 
  Issue: Whether pharmaceutical sales representatives were exempt from FLSA overtime-pay requirements as "outside salesmen."  

Christopher, a pharmaceutical sales representative (PSR), sued the employer for violation of the Fair Labor Standards Act (FLSA) alleging failure to pay overtime. The trial court granted the employer's motion for summary judgment and denied Christopher's motion to amend the judgment based on the trial court's failure to consider an amicus brief filed by the Secretary of the Department of Labor (DOL). The 9th Circuit affirmed. The issue on appeal was whether Christopher was an "outside salesmen" exempt from the FLSA's overtime-pay requirement. The court found he was exempt. 

With respect to the Secretary's appearance as amicus supporting Christopher, the court concluded it owed no deference to the Secretary's current interpretation of the regulations and disagreed with that interpretation. The court found the regulations merely "parrot" section 3(k) of the FLSA and, as such, acquired no special authority by paraphrasing the statutory language. Gonzales v. Oregon, 546 US 243, 257 (2006). In view of many similarities between PSRs and salespeople in other fields, pharmaceutical industry norms, and the acquiescence of the Secretary over the last seventy-plus years, the court could not accord even minimal Skidmore deference to the position expressed in the amicus brief. 

[In contrast to the 9th Circuit, the 2nd Circuit adopted the Secretary's position that PSRs did not meet the requirements of the outside sales exemption "when an employee promotes to a physician a pharmaceutical that may thereafter be purchased by a patient from a pharmacy ... the employee does not in any sense make a sale." In re Novartis Wage & Hour Litigation, 611 F3d 141 (2d Cir. 2010).] 

Case below:  Christopher v. SmithKline Beecham Corp (9th Cir 02/14/2011) 
Official docket sheet 
Certiorari granted: November 28, 2011. 
Oral argument: Monday, April 16, 2012. 

Questions presented in petition for certiorari:   

The outside sales exemption of the Fair Labor Standards Act exempts from the overtime requirements of the Act "any employee employed... in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary .)." 29 U.S.C. § 213(a)(1). The Secretary of Labor has implemented various regulations that "define and delimit" the outside sales exemption and, filing as amici in this and other related matters, has interpreted these regulations to find the exemption inapplicable to pharmaceutical sales representatives. A split exists between the Second and Ninth Circuits concerning whether this interpretation is owed deference and whether the outside sales exemption of the Fair Labor Standards Act applies to pharmaceutical sales representatives. 

The questions presented are: 

(1) Whether deference is owed to the Secretary’s interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations; and 

(2) Whether the Fair Labor Standards Act’s outside sales exemption applies to pharmaceutical sales representatives. 


Briefs on the merits: 



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Harris v Superior Court - Administrative exemption in California
December 29, 2011 by Ross Runkel at LawMemo

Today's big decision out of California is Harris v. Superior Court, an employer-favoring opinion on how to tell whether an employee is exempt under the California Labor Code and thus not entitled to statutory overtime.

The case deals with insurance claims adjusters, but it will apply across the board.

The California Court of Appeal had ruled that insurance claims adjusters are not exempt employees as a matter of law. The California Supreme Court unanimously reversed, finding that the Court of Appeal simply got the law wrong.

The Court of Appeal had said that the only employees who qualify as exempt are those whose work is "performed at the level of policy or general operations." Everyone else, then would be a production worker, and not exempt.

The Supreme Court rejected that bright line between administration and production. Indeed, the holding of the court went no further than that. The court said, "We merely hold that the Court of Appeal improperly applied the administrative/production worker dichotomy as a dispositive test."

However, if you want to read an interesting discussion of the details of the opinion, look at Cal Supreme Court Reverses Horrific Decision on Administrative Exemption But Declines to Provide Much Guidance on How Exemption Should Be Applied by Thomas Kaufman at Labor and Employment Law Blog.



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DOL proposed rule on companionship & live-in workers
December 15, 2011 by Ross Runkel at LawMemo

The Department of Labor announced today that it will publish a proposed rule to revise the companionship and live-in worker regulations under the Fair Labor Standards Act to

(1) more clearly define the tasks that may be performed by an exempt companion,

and

(2) limit the companionship exemption to companions employed only by the family or household using the services. Third party employers, such as in-home care staffing agencies, could not claim the exemption, even if the employee is jointly employed by the third party and the family or household.

[Announcement]
[Rule text]



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SCOTUS will hear FLSA pharma sales rep case
November 28, 2011 by Ross Runkel at LawMemo

The US Supreme Court granted certiorari this morning in Christopher v. SmithKline Beecham Corp. [Details, briefs] Oral arguments will be scheduled for Spring 2012.

The issues:

The case appears to be about whether the Fair Labor Standards Act's outside sales exemption applies to pharmaceutical sales representatives - that is, whether these representatives are unable to claim FLSA overtime.

Yet the issue of more lasting interest - and the issue that ought to attract the Court's interest - is whether deference is owed to the Secretary of Labor's interpretation of the Fair Labor Standards Act's outside sales exemption and related regulations.


Regarding the deference issue, here is how the Respondent, SmithKline, put it in their brief:

During most of the more than 70 years since enactment of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., pharmaceutical companies have employed pharmaceutical sales representatives and, consistent with Department of Labor regulations first promulgated in 1940 and reaffirmed as recently as in 2004 defining the term “sales” broadly, classified those sales representatives as exempt from the FLSA’s overtime pay requirements under the “outside sales” exemption, 29 U.S.C. § 213(a)(1). In 2009, the Department began filing amicus briefs in private civil litigation announcing its new position that sales representatives are not now and have never been exempt because they do not “sell” as that term is defined in Section 3(k) of the FLSA, 29 U.S.C. § 203(k). The United States Court of Appeals for the Ninth Circuit refused to defer to that abrupt change in position and held that sales representatives are exempt.

Background:

Christopher, a pharmaceutical sales representative (PSR), sued the employer for violation of the Fair Labor Standards Act (FLSA) alleging failure to pay overtime. The trial court granted the employer's motion for summary judgment and denied Christopher's motion to amend the judgment based on the trial court's failure to consider an amicus brief filed by the Secretary of the Department of Labor (DOL). The 9th Circuit affirmed. The issue on appeal was whether Christopher was an "outside salesmen" exempt from the FLSA's overtime-pay requirement. The court found he was exempt.

With respect to the Secretary's appearance as amicus supporting Christopher, the court concluded it owed no deference to the Secretary's current interpretation of the regulations and disagreed with that interpretation. The court found the regulations merely "parrot" section 3(k) of the FLSA and, as such, acquired no special authority by paraphrasing the statutory language. Gonzales v. Oregon, 546 US 243, 257 (2006). In view of many similarities between PSRs and salespeople in other fields, pharmaceutical industry norms, and the acquiescence of the Secretary over the last seventy-plus years, the court could not accord even minimal Skidmore deference to the position expressed in the amicus brief.

[In contrast to the 9th Circuit, the 2nd Circuit adopted the Secretary's position that PSRs did not meet the requirements of the outside sales exemption "when an employee promotes to a physician a pharmaceutical that may thereafter be purchased by a patient from a pharmacy ... the employee does not in any sense make a sale." In re Novartis Wage & Hour Litig., 611 F3d 141 (2d Cir. 2010).]



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iPhone wage-and-hours app
May 10, 2011 by Ross Runkel at LawMemo

Courtesy of the US Department of Labor, there is now an app for your iPhone or iPod Touch that employees can use to record their hours (including overtime) and calculate wages owed. It's a free download [here].

I am testing this app right now. It lets an employee punch in start times, end times, breaks, lunch periods. It's all recorded on the iPhone, and a report can be sent out by email.

Frankly, the app is a bit awkward. Not as intuitive as one would hope for.

And remember what some of us learned at the beginning of the computer revolution: GIGO - garbage in, garbage out. That simply means the output from this device is no more accurate than the information that is initially put into it.

Here is the official Description from DOL:

This is a timesheet to record the hours that you work and calculate the amount you may be owed by your employer. It also includes overtime pay calculations at a rate of one and one-half times (1.5) the regular rate of pay for all hours you work over 40 in a workweek.

This DOL-Timesheet does not handle items such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials, or pay for regular days of rest.

Here is DOL's announcement [link]

The U.S. Department of Labor today announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.

The free app is currently compatible with the iPhone and iPod Touch. The Labor Department will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.
For workers without a smartphone, the Wage and Hour Division has a printable work hours calendar in English and Spanish to track rate of pay, work start and stop times, and arrival and departure times. The calendar also includes easy-to-understand information about workers’ rights and how to file a wage violation complaint.



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Novartis v. Lopes - cert denied in FLSA case
February 28, 2011 by Ross Runkel at LawMemo

This morning the US Supreme Court denied certiorari in Novartis Pharmaceuticals Corp v. Lopes and in Schering Corp v. Kuzinski. [Details]

Plaintiffs, pharmaceutical sales representatives, in a class action sued the employer for violation of the Fair Labor Standards Act (FLSA) alleging failure to pay overtime. The trial court granted the employer's motion for summary judgment. The 2nd Circuit reversed.

Plaintiffs did not sell drugs, visiting physicians to encourage prescriptions of the employer's products and providing drug samples and information. The issue was whether the plaintiffs were outside salesmen or administrative employees exercising discretion and independent judgment, both exempt from the FLSA.

The 2nd Circuit thought it clear that the regulations, defining the term "sale" as involving a transfer of title and explained in the Preamble to the 2004 Final Rule as obtaining a commitment to buy, and defining and delimiting the term "outside salesmen" in connection with an employee's efforts to promote the employer's products, did far more than merely parrot the language of the FLSA. The court granted "controlling" deference to the Department of Labor Secretary's interpretations of her regulations, which the court found were not inconsistent or plainly erroneous with the regulations. The 2nd Circuit concluded the plaintiffs were not outside salesmen. With respect to the administrative exemption, the court noted that the Secretary stated that the regulations required a showing of a greater degree of discretion, and more authority to use independent judgment in matters of significance, than the employer allowed the plaintiffs.

The 2nd Circuit found it appropriate to defer to the Secretary's interpretation, even though it was advanced for the first time in an amicus brief.

[Ed. Note: The 9th Circuit reached the opposite conclusion in Christopher v. SmithKline (9th Cir 02/14/2011), finding that pharmaceutical sales representatives were exempt from FLSA overtime-pay requirements as "outside salesmen."]




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Arbitration agreement cannot waive right to administrative wage hearing
February 24, 2011 by Ross Runkel at LawMemo

The California Supreme Court held today [Sonic-Calabasas A Inc v. Moreno (California 02/24/2011) (4-3)] that an arbitration agreement cannot waive an employee's right to have an administrative hearing to resolve a claim for unpaid wages.

Under California's unpaid wages statute, an employee can seek an administrative hearing which results in a nonbinding decision, followed by an appeal de novo to a trial court. Moreno, who had signed an agreement to arbitrate all claims, filed an administrative wage claim with the state Labor Commissioner. The employer petitioned the trial court to compel arbitration and dismiss the administrative proceeding, but this was denied as premature. The California Supreme Court agreed that the petition to compel arbitration was premature and must be denied, holding that:

(1) A waiver of the administrative hearing violates public policy. The right to this administrative proceeding is an unwaivable right that an employee cannot relinquish as a condition of employment. The administrative proceeding provides many benefits to employees (e.g., the Labor Commissioner's representation in the superior court of employees unable to afford counsel, the requirement that the employer post an undertaking in the amount of the award, and a one-way attorney fee provision that requires an employer that is unsuccessful in the appeal to pay the employee's attorney fees) as a means of furthering the public purpose of ensuring the payment of wages owed.

(2) A waiver of the administrative hearing is unconscionable because the arbitration agreement was an adhesion agreement and the waiver is "markedly one-sided."

(3) The Federal Arbitration Act does not preempt a decision that waiver of the administrative proceeding violates public policy and is unconscionable. [Ed. Note: A decision on a closely related issue is pending in the US Supreme Court in AT&T Mobility v. Concepcion.]

(4) Courts may enforce the arbitration agreement as it relates to the court proceedings that may follow after the administrative hearing is held.

The DISSENT argued that (1) when parties have agreed to arbitrate, the Federal Arbitration Act supersedes state laws that lodge primary jurisdiction in administrative agencies, and (2) enforcing the arbitration provision does not violate California public policy and is not unconscionable.



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DOL redefines "clothes"
June 16, 2010 by Ross Runkel at LawMemo

On June 16 the DOL issued an Administrator's Interpretation on the meaning of the § 203(o) "changing clothes" exemption to FLSA compensable time.

Returning to pre-2002 interpretations, DOL says: "Based on its statutory language and legislative history, it is the Administrator’s interpretation that the § 203(o) exemption does not extend to protective equipment worn by employees that is required by law, by the employer, or due to the nature of the job. This interpretation reaffirms the interpretations set out in the 1997, 1998 and 2001 opinion letters and is consistent with the “plain meaning” analysis of the Ninth Circuit in Alvarez. Those portions of the 2002 opinion letter that address the phrase “changing clothes” and the 2007 opinion letter in its entirety, which are inconsistent with this interpretation, should no longer be relied upon."

DOL also says, "clothes changing covered by § 203(o) may be a principal activity. Where that is the case, subsequent activities, including walking and waiting, are compensable."

[Administrator's Interpretation No. 2010-2]

We suggest careful studying of this Administrator's Interpretation.



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DOL fact sheet on internship programs
April 22, 2010 by Ross Runkel at LawMemo

The US Department of Labor has issued a fact sheet on interns in the for-profit private sector. Here is the full text:

Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

This fact sheet provides general information to help determine whether interns must be paid the minimum wage and overtime under the Fair Labor Standards Act for the services that they provide to “for-profit” private sector employers.

Background

The Fair Labor Standards Act (FLSA) defines the term “employ” very broadly as including to “suffer or permit to work.”  Covered and non-exempt individuals who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer.  Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met.  Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek*

The Test For Unpaid Interns

There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation.  The Supreme Court has held that the term "suffer or permit to work" cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction.  This may apply to interns who receive training for their own educational benefit if the training meets certain criteria.  The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.

The following six criteria must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.  This exclusion from the definition of employment is necessarily quite narrow because the FLSA’s definition of “employ” is very broad.  Some of the most commonly discussed factors for “for-profit” private sector internship programs are considered below.

Similar To An Education Environment And The Primary Beneficiary Of The Activity

In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit).  The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training.  Under these circumstances the intern does not perform the routine work of the business on a regular and recurring basis, and the business is not dependent upon the work of the intern.  On the other hand, if the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.

Displacement And Supervision Issues

If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.  If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA.  Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.  On the other hand, if the intern receives the same level of supervision as the employer’s regular workforce, this would suggest an employment relationship, rather than training.

Job Entitlement

The internship should be of a fixed duration, established prior to the outset of the internship.  Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period.  If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.

Where to Obtain Additional Information

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).


* The FLSA makes a special exception under certain circumstances for individuals who volunteer to perform services for a state or local government agency and for individuals who volunteer for humanitarian purposes for private non-profit food banks. WHD also recognizes an exception for individuals who volunteer their time, freely and without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations.  Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. WHD is reviewing the need for additional guidance on internships in the public and non-profit sectors.



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FLSA to require nursing mother breaks
April 01, 2010 by Ross Runkel at LawMemo

The Patient Protection and Affordable Care Act amends the FLSA as follows:

SEC. 4207. REASONABLE BREAK TIME FOR NURSING MOTHERS.

Section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207) is amended by adding at the end the following:

"(r)(1) An employer shall provide—

"(A) a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child's birth each time such employee has need to express the milk; and

"(B) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

"(2) An employer shall not be required to compensate an employee receiving reasonable break time under paragraph (1) for any work time spent for such purpose.

"(3) An employer that employs less than 50 employees shall not be subject to the requirements of this subsection, if such requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer's business.

"(4) Nothing in this subsection shall preempt a State law that provides greater protections to employees than the protections provided for under this subsection.".



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DOL: Mortgage loan officers not FLSA exempt
March 30, 2010 by Ross Runkel at LawMemo

The Department of Labor has reversed itself, and now says that employees who perform the typical job duties of a mortgage loan officer do not qualify as bona fide administrative employees exempt under section 13(a)(1) of the Fair Labor Standards Act, 29 USC § 213(a)(1).

Previous opinion letters (September 8, 2006 and February 16, 2001) had found such employees to be exempt administrative employees.

[Administrator's Interpretation]



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SCOTUS to decide whether oral complaint is protected conduct under FLSA ant-retaliation provision
March 22, 2010 by Ross Runkel at LawMemo

Kasten v. Saint-Gobain Performance Plastics Corp (certiorari granted 03/22/2010)
[Details, briefs]

Kasten sued the employer, asserting a retaliation claim under the Fair Labor Standards Act (FLSA). The trial court granted summary judgment in favor of the employer. The 7th Circuit affirmed.

Kasten alleged that he was discharged in retaliation for making verbal complaints to his superiors that the employer's placement of time clocks violated the Fair Labor Standards Act (FLSA). The FLSA's anti-retaliation provision prohibits an employer from retaliating against an employee because the employee "has filed any complaint...." 29 USC Section 215(a)(3).

The 7th Circuit held that "any complaint" includes an employee's internal ("intra-company") complaint. However, the court also held that an employee does not "file" such a complaint in this context when he submits the complaint in purely unwritten form. The court reasoned, "the natural understanding of the phrase 'file any complaint' requires the submission of some writing to an employer, court, or administrative body."

The 7th Circuit denied a rehearing en banc. Three judges DISSENTED from the denial of a rehearing, saying that "The court has adopted a construction of the Fair Labor Standard Act's anti-retaliation provision that is unique among the circuits." "[T]he court has taken a position contrary to the longstanding view of the Department of Labor, departed from the holdings of other circuits, and interpreted the statutory language in a way that I believe is contrary to the understanding of Congress."

The US Supreme Court granted certiorari to review the 7th Circuit judgment. The Court will decide the following question:

"Is an oral complaint of a violation of the Fair Labor Standards Act protected conduct under the anti-retaliation provision, 29 U.S.C. § 215(a)(3)?"


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$969,182 overtime payments
March 05, 2010 by Ross Runkel at LawMemo

Husky Energy Corp, a petroleum refinery located in Lima, has paid $969,182 in back wages to 173 workers for unpaid overtime compensation after the Department of Labor determined the company had violated FLSA overtime pay provisions.

[Press release]



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$1,456,422 back wages sought by DOL
February 22, 2010 by Ross Runkel at LawMemo

Department of Labor is seeking $1,456,422 in back wages allegedly due to 163 workers employed by Peri Software Solutions.

DOL claims that the company failed to pay the required prevailing wage to workers hired as computer analysts under the H-1B visa program.

[Press release]



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$1 million overtime back wages
February 13, 2010 by Ross Runkel at LawMemo

DOL filed a consent judgment against Fluor Enterprises Inc and obtained a default judgment against its subcontractor.

DOL claimed a failure to pay overtime as required by the FLSA, in the wake of Hurricane Katrina.

A settlement agreement will provide for payment of $1 million for 154 hurricane workers.

[Press release]



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$1,001,438 FLSA settlement
February 07, 2010 by Ross Runkel at LawMemo

Department of Labor sued poultry producer Pilgrim’s Pride Corp, claiming a failure to pay overtime.

In a consent judgment, the company has agreed to pay $1,001,438 in overtime back wages for 798 former and current employees, and agreed to pay for time spent by employees "donning and doffing," or putting on and taking off work-related gear in all processing plants nationwide.

DOC Press release 01/29/2010:

US Labor Department resolves back wage case against Pittsburg, Texas-based Pilgrim’s Pride Corp.

Workers to recover more than $1 million in overtime back wages

DALLAS — The U.S. Department of Labor today announced the filing of a consent judgment in a case against Pilgrim’s Pride Corp. – the country’s largest poultry processor — recovering $1,001,438 in overtime back wages for 798 former and current processing workers at the company’s Dallas facility. The company also agreed to pay for time spent by employees "donning and doffing," or putting on and taking off work-related gear in all processing plants nationwide.

"I am committed to ensuring that all workers receive the compensation to which they are entitled under the law," said Secretary of Labor Hilda L. Solis. "Poultry processing is physically demanding hard work, and no one should leave at the end of his or her shift without having been paid for all time worked."

This agreement marks another major step in the department's poultry initiative, which is aimed at ensuring that the poultry processing industry pays its workers all wages to which they are entitled.

The agreement was filed with the U.S. District Court for the Western District of Arkansas, El Dorado Division, and settles allegations that Pilgrim's Pride Corp. failed to properly pay overtime back wages as required by the Fair Labor Standards Act (FLSA). The law's overtime violations occurred in part because the company failed to pay its employees for all hours worked, including time spent putting on and taking off protective clothing. Additionally, required recordkeeping was not maintained.

"These low-wage workers were not paid for time donning and doffing at the beginning and end of the workday and before and after meals," said Cynthia Watson, regional administrator for the Labor Department's Wage and Hour Division's Southwest Region. The department's legal action followed an investigation by the division.

The agreement stipulates that Pilgrim's Pride will comply with FLSA regulations regarding donning and doffing, and recordkeeping, and also enjoins the entire company from committing future violations.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers must also maintain accurate time and payroll records.

For more information about the FLSA, call the Wage and Hour Division's Dallas District Office at 817-861-2150 or the Department of Labor's toll-free helpline at 866-4US-WAGE (487-9243). Information is also available on the Internet at http://www.wagehour.dol.gov.




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$6.5 million settles living wage suit
December 21, 2009 by Ross Runkel at LawMemo

Cintas Uniform Co has agreed to pay $6,500,000 to settle a claim that it failed to pay a living wage while under a contract with Los Angeles County, as required by the Los Angeles County Living Wage Ordinance.

$3,300,000 represents back wages and interest. The rest is for penalties and legal fees.

[Article]



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$1 billion in overtime claims
December 18, 2009 by Ross Runkel at LawMemo

$1 billion in overtime claims

Two class actions against AT&T claim that about 5,000 workers have been deprived of overtime pay to the tune of a billion dollars.

The claims allege that exempting first-level managers from overtime pay was a violation of federal labor laws and California state laws.

[Article]



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$1,715,815 citation for not paying prevailing fringe benefits
December 16, 2009 by Ross Runkel at LawMemo

Department of Labor has cited an employer $1,715,815 for underpaying 483 employees' health and welfare fringe benefits, claiming a violation of the fringe benefits provisions of the McNamara-O'Hara Service Contract Act (SCA).

[Press release]



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$980,121 recovered for unpaid wages
December 16, 2009 by Ross Runkel at LawMemo

Department of Labor has recovered $980,121 on behalf of employees of a company that provided security guards to six government agencies.

The company began missing payrolls in August 2009, in violation of the McNamara-O'Hara Service Contract Act (SCA) and the Contractor Work Hours Safety Standards Act (CWHSSA).

[Press release]



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$1,738,133 in unpaid overtime
December 14, 2009 by Ross Runkel at LawMemo

Department of Labor has recovered $1,738,133 from a medical corporation comprised of seven health care centers and hospitals.

DOL found that the company violated the FLSA's overtime provisions by failing to pay its nursing staff time and one-half their regular rates for hours worked beyond 40 in a workweek, in that employees were not paid when they were required to work during some meal periods. The claim involved 4,007 employees.

[Press release]



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$12.8 million settlement on claimed misclassification of employees
December 14, 2009 by Ross Runkel at LawMemo

A federal judge has preliminarily approved a $12.8 million settlement between UPS Supply Chain Solutions and a class of 660 delivery drivers who claimed they were denied overtime payment because they were misclassified as independent contractors rather than employees.

[Article]



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Deductions for partial and full day absences of exempt employees
December 04, 2009 by Ross Runkel at LawMemo

The California Department of Industrial Relations Division of Labor Standards Enforcement (DLSE) says that it may be permissible for an employer to deduct from an exempt employee's leave balances due to partial day absences due to vacation or sickness. (It is impermissible to deduct from a salary.)

[DLSE opinion letter]



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