Wyatt Employment Law Report

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Sixth Circuit Holds that Casino Security Guards Will Not Receive Overtime for Monitoring Radios During Lunch Breaks

By Amanda Warford Edge

On Wednesday, January 7, 2015, the Sixth Circuit issued a published opinion in Ruffin v. MotorCity Casino, affirming the district court’s decision that security guards at MotorCity Casino were not entitled to overtime payments under the Fair Labor Standards Act, 29 U.S.C. 207(a). In doing so, the Sixth Circuit held that the guards’ meal breaks were not compensable under the FLSA, even though MotorCity required them to stay on casino property, monitor their two-way radios, and respond in case of an emergency. Although the proposition that compensable work requires more than simple radio monitoring is not novel, the Sixth Circuit’s rationale—as well as the standards set forth in the opinion—are nonetheless important for employers and employees alike.

The security guards filed suit against MotorCity in 2012, claiming that they were entitled to overtime pay because MotorCity required them to “work” during their paid lunch breaks. OLYMPUS DIGITAL CAMERAAccording to the guards, who were regularly scheduled to work weekly 40-hour shifts, mandatory 15-minute meetings prior to each shift were compensable, entitling them to overtime pay on the additional 1.25 hours under the FLSA. The crux of this claim was that the guards’ 30-minute paid meal breaks actually constituted “work” since MotorCity restricted their actions during the breaks. The guards highlighted that during their meal breaks, they could not leave casino property, have food delivered to the casino, or receive visitors. Further, they were required to Continue reading

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Supreme Court Holds that Employer-Required Security Screenings Are Not Compensable Time in Integrity Staffing Solutions, Inc. v. Busk, 574 U.S. ___ (2014).

On December 9, 2014, the Supreme Court unanimously held that warehouse employees were not entitled to be compensated for time spent at the end of their shifts in security screenings. The Court held that the post-shift screening activity was not compensable because it was not “integral and indispensable” to the principal activities the employees were hired to perform.

employee_staff_punch_clock_medThe employer, Integrity Staffing, provides warehouse  employee staffing to Amazon.com in various locations throughout the U.S. The Plaintiffs were hired to locate products in a warehouse and prepare them to be shipped. Id. at 1-2. Integrity Staffing required that its warehouse workers undergo security screenings at the end of their shifts to protect against employee theft. These screenings involved employees removing items like wallets, keys and belts, and passing through metal detectors. This process sometimes took up to 25 minutes. Id. at 2.

The Plaintiff/employees argued that they were entitled to be paid under the Fair Labor Standards Act (FLSA) for time spent waiting in line to undergo security screenings. They argued that the security screenings were solely for Continue reading

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Wage and Hour Division Releases Enforcement Statistics

By Michelle D. Wyrick

The U.S. Department of Labor’s Wage and Hour Division recently released enforcement statistics for fiscal years 2009 through 2013. Of particular note to employers, the Wage and Hour Division continues to process a high number of wage and hour complaints, with a particular focus on workers in low-wage industries. Conversely, the number of Family and Medical Leave Act cases has decreased over the last two fiscal years.

According to the enforcement statistics, in fiscal year 2013, the Wage and Hour Division collected approximately $250,000,000 in back wages in wage and hour cases. That number represents a small decrease from the back wages collected in fiscal year 2012 but is still the second highest amount collected since fiscal year 2004. In addition, the number of enforcement hours spent on wage and hour complaints has risen substantially over the last four fiscal years.

The statistics also highlight back wages recovered for workers in low-wage industries. These industries include agriculture, day care, restaurants, garment manufacturing, guard services, health care, hotels and motels, janitorial services, and temporary help. The number of cases filed against employers in low-wage industries continues to increase. Likewise, the amount of back wages recovered for workers in low-wage industries rose significantly during the last two fiscal years ($83,051,160 and $97,912,954, respectively).

Until there is a change in the administration, employers should expect the Wage and Hour Division to continue to emphasize enforcement of the Fair Labor Standards Act, with a priority on workers in low-wage industries.

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White House Seeking Expansion of Overtime Pay Under the FLSA

By Mitzi D. Wyrick

President Obama has directed the U.S. Department of Labor (“DOL”) to revise regulations under the Fair Labor Standards Act to make more workers eligible for overtime pay.  Specifically, the DOL will be reviewing the executive, professional, and administrative exemptions, sometimes referred to as the “white-collar” exemptions from the requirement to pay overtime for hours worked over 40 in a workweek.  The salary basis threshold, which is currently set at $455 per week, will be one area of focus.  In addition, the White House has directed the DOL to review other exemptions changes to which would result in more overtime pay based on the type of work performed.  For example, under the revised regulations thought to being considered, store managers who also perform non-management duties may be entitled to overtime pay unless they can demonstrate that the majority of their time is spent performing management work.  Read more about it at:  http://t.co/KgEmpdqfZT

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Employers Get Ready! NEW Notice Requirement under the Affordable Care Act

By Sherry P. Porter

Overview of the New Notice Requirement

Most employers will have a new notification requirement beginning October 1, 2013.  Under the Patient Protection and Affordable Care Act (ACA), new health insurance options will be available under the health care exchanges or marketplaces as of January 1, 2014.  Employers are required to provide notices to their employees about these new health insurance options by October 1, 2013 which corresponds with the date open enrollment begins on the marketplaces for health insurance coverage beginning January 1, 2014.

The ACA added a new provision under the Fair Labor Standards Act (FLSA) that requires an employer to notify all of its employees about the new health insurance options available through the marketplace.  This requirement applies to all employers who are subject to the FLSA.  This generally applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce with at least $500,000 in annual dollar volume of business or if the employer is one of a list of certain employers such as hospitals, schools, government agencies and others.  To see if you are subject to the FLSA, you can visit their internet compliance tool:  http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp

Assuming you are subject to the FLSA, you will need to comply with the notification requirement by October 1, 2013.  All full time and part time employees must receive the notice.  Employers must provide the notice even if they do not provide health insurance for their employees.  Employers do not have to provide the notice to dependents, former employees or other individuals who may be covered under their health plan, such as retirees.  The marketplaces open on October 1, 2013 which is driving this deadline.  Under the ACA, nearly all Americans will be required to have health insurance coverage by January 1, 2014 or risk a penalty assessment.

Notice Contents

The notices must contain certain information about the marketplace.  The notice must (1) inform the employee of the existence of the marketplace and include a description of the services provided and contact information, (2) inform the employee that if the employer plan does not provide a minimum value, then the employee may be eligible for premium tax credits under the ACA if s/he purchases insurance through the marketplace, and (3) inform the employee that if s/he purchases insurance through the marketplace, s/he may lose any employer contribution toward such coverage and that all or a part of the employer’s contribution may be excluded from their income.

The Department of Labor recently issued two model notices that an employer may use to meet this notification requirement – one for employers that offer a  health plan for its employees and one for employers that do not offer a health plan for its employees.  However, these model notices are not the type that an employer can just print out and send to its employees.  The forms will require the employer to have a real handle on its health insurance plan and how it meshes with the requirements under the ACA in order to fulfill the notification requirement.  Employers may use the model notices or create their own notices so long as they contain the required information.

Giving Notice

If an employer does not sponsor a health plan for its employees, there is a sample form that may be used.  Generally, if the employer is not a “large” employer (it has less than 50 full time equivalent employees), then it is not subject to potential ACA penalties for not offering health insurance coverage to its full time employees.  Many small employers do not offer health insurance for a myriad of reasons.  The employer that does not provide health insurance to its employees will need to provide the required information along with its contact information and distribute it to all employees by October 1.  This information will be needed by employees who seek to obtain insurance through the marketplace.

For employers that sponsor health plans for employees, the form is a little more complicated.  The basic information is the same but the employer must add information about the health plan it sponsors.  Employers will have to provide information about its health plan and whether or not the coverage meets the affordability and minimum value standards mandated by the ACA.  Employers must be analyzing this now to be able to complete the required notification.  If an employer has not determined the status of its plan under the ACA and how it will comply or not comply, then it cannot properly complete the form. 

The model notices direct employees to a website (www.healthcare.gov) for more information about the marketplace. While this should relieve the employer from explaining the notice to employees, employers are still going to be inundated with questions as the individual insurance mandate and marketplaces go into effect.  You will need to be ready to handle these questions.  Many employers will take advantage of this opportunity to educate their employees about the upcoming mandates under the ACA, the impact on employer provided health insurance and understanding the how the ACA impacts the employer as well as the employee. 

For existing employees, the notice must be provided by October 1, 2013. Beginning October 1, 2013, the notice must be given to each new hire.  For 2014, new hires must receive the notice within 14 days of their start date.  The notice must be provided free of charge, can be sent by first class mail and must be provided in writing that can be understood by the average employee.  An employer may also send the notice electronically so long as all of the Department of Labor’s electronic disclosure rules are met.

 Revised COBRA Notice

For many years, employers have been providing COBRA notices to employees and dependents who experience a qualifying event under COBRA to allow them to continue health care coverage at their own expense.  Now, all COBRA notices will need to be revised to include information about the marketplace.  The DOL has updated its existing COBRA notice on its website.  From October 1, 2013, all COBRA notices must contain the new information about the marketplace.  The new language may be confusing to employees so employers are going to have to be ready for questions.

 What Should Employers Do Now?

All employers should be developing their own communication plan about the new health insurance requirements to avoid confusion by employees and to keep employees informed.  The notices provided by the DOL contain terms that are going to be confusing to employees and will likely prompt even more questions.  Many employers are taking this opportunity to educate their employees about the ACA and the impact it has on employer provided health insurance.  Employers will need to look at their own work force to determine what is best for all involved.  Employers may wish to modify the DOL’s forms to best suit their work force and may very well end up with different forms for different groups of employees.  An employer can only comply with the notice requirements if it has a good understanding of its health plan’s compliance under the ACA – so don’t delay!

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House Passes Comp Time Law

 By Edwin S. Hopson

On May 8, 2013, the U.S. House of Representatives passed the Working Families Flexibility Act of 2013 (H.R. 1406), a law that would amend the Fair Labor Standards Act of 1938 to give employees the opportunity to accrue paid time off or “comp time” for working overtime hours in lieu of receiving overtime pay.

The bill provides as follows:

  • Allows employers to offer employees a choice between cash wages and accruing comp time for overtime hours worked during a workweek.
  • Protects employees by requiring the employer and the employee to complete a written agreement to use comp time, entered into knowingly and voluntarily by the employee. If the employee is represented by a labor organization, the agreement to take comp time must be negotiated as part of the union contract.
  • Retains all existing employee protections in current law, including how overtime pay is calculated.
  • Allows employees to accrue up to 160 hours of comp time each year.  An employer would be required to pay cash wages for any unused time at the end of the year. Workers would be free to cash out their accrued comp time whenever they choose to do so.
  • Requires the nonpartisan Government Accountability Office to report to Congress on the extent private-sector employers and employees are using comp time, and the number of complaints filed with and enforcement actions taken by the U.S. Department of Labor.

 The measure is expected to face stiff opposition in the Senate.

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Supreme Court Rules Drug Company Sales Employees Are Not Entitled to Overtime Pay

By Edwin S. Hopson

In Christopher et al. v. SmithKline Beecham Corp., d/b/a Glasxosmithkline, 567 U.S. ___ (2012), No. 11-204, decided June 18, 2012, the U.S. Supreme Court, in a 5-4 decision, ruled that certain drug sales employees are to be treated as “outside salesmen” under the Fair Labor Standards Act (FLSA) and therefore are exempt from the overtime requirements of the law.  The drug sales employees had filed a private action against their employer under the FLSA seeking unpaid overtime pay.  The U.S. Department of Labor had filed an amicus brief supporting the employees’ claims.

The court’s opinion was authored by Justice Alito, who was joined by Chief Justice Roberts, and Justices Scalia, Kennedy and Thomas.  Justice Breyer wrote a dissenting opinion that was joined in by Justices Ginsburg, Sotomayor and Kagan.

The majority, after rejecting any deference to the Department of Labor’s interpretation, reviewed the FLSA and its regulations and concluded that the drug sales employees were exempt even though they only obtained non-binding commitments from doctors to prescribe their drugs to their patients (who actually were the purchasers in most cases).  The statutory provision in question, 29 U. S. C. §203(k), states that “‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” [Emphasis added].  The majority seized upon the “or other disposition” phrase and ruled for the drug company defendant, pointing out, “Petitioners—each of whom earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal business hours each week performing work related to his assigned portfolio of drugs in his assigned sales territory—are hardly the kind of employees that the FLSA was intended to protect.” Slip Opinion Page 22.