Wage and Hour Defense Blog

From the time of its original enactment in 1938, the Fair Labor Standards Act has contained an exemption for certain employees of a “retail or service establishment.”  In 1961, the Department of Labor’s Wage and Hour Division (“WHD”) issued interpretive guidance to aid in determining whether an establishment is or is not “retail or service” for purposes of what was then the section 13(a)(2) overtime and minimum wage exemption.  Part of the test includes whether the business is in an industry in which a “retail concept” exists.  See 29 C.F.R. § 779.316.  WHD created ...

Let me be the millionth person to say that we are living in unprecedented times.

Well, unless you count the Spanish Flu, which few of us probably dealt with as that was more than a century ago.

And, not incidentally, few if any of the wage-hour laws employers deal with today were in place back then.

As employers navigate issues that they never imagined, there are more than a few myths circulating about wage-hour laws that are worth mentioning here – and worth debunking.

Myth No. 1: “Employees Won’t Sue Over Alleged Wage-Hour Violations Occurring During The COVID-19 Crisis”

The ...

With summer rapidly approaching and COVID-19 shelter-in-place orders still in effect, many companies face an important and difficult decision of canceling this year’s summer programs, delaying start dates or conducting programs virtually. This ultimately will be a business decision with no one-size-fits-all answer.

A good first step is to assess whether the influx of new summer workers will help or hinder current operations. Are temporary summer interns a boost to productivity or a drag on experienced employees who may be called upon to train and mentor them? Will the employer expect to offer employment to these summer recruits following the internship?

In addition, given the seismic nature of COVID-19 that has indiscriminately shaken businesses in most industries, can an employer’s business afford to bring on temporary summer workers and, if so, does the business have the literal and figurative bandwidth to support these workers, especially if they will be teleworking for at least part of the summer?

Below are five compliance and management issues employers should consider for their upcoming summer programs.

Onboarding

Typically employers have a pre-employment screening process in place for summer interns/analysts/associates, which may include, among other things, screening for illegal drugs and controlled substances; investigating and verifying criminal history; and verifying education and prior employment history. Many steps in the screening process take place in person. However, even where new hires may be asked to commence employment remotely, including an incoming summer class, compliance is still possible.

Since the start of COVID-19 pandemic, the federal government has relaxed many of the regulatory requirements for onboarding new hires. On March 20, the U.S. Department of Homeland Security announced that for the next 60 days or for the duration of the National Emergency (whichever is sooner), employers with staff teleworking due to COVID-19 can obtain and inspect new employees’ identity and employment authorization documents remotely rather in the employee’s physical presence, as long as they provide written documentation of their remote onboarding and teleworking policy for each employee.

For those of you who may have been wondering whether the California Attorney General’s office was still open during the statewide stay-at-home order triggered by the coronavirus, the answer is yes – as evidenced by a statewide misclassification lawsuit filed in San Francisco by the Attorney General, along with the city attorneys for Los Angeles, San Francisco and San Diego.

The lawsuit alleges that ride share companies have unlawfully misclassified drivers as independent contractors under AB 5, the controversial statute that went into effect on January 1, 2020.

As we previously wrote here, AB5 codified and expanded the “ABC” test adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court for determining whether workers in California should be classified as employees or as independent contractors.

To satisfy the “ABC” test, the hiring entity must demonstrate that:

• the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
• the worker performs work that is outside the usual course of the hiring entity’s business; and
• the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Generally, the Fair Labor Standards Act (“FLSA”) requires employers to compensate their non-exempt employees for all time that they are required or allowed to perform work, regardless of where and when the work is done.  However, an exception exists for small amounts of time that are otherwise compensable work time but challenging to record, otherwise known as the de minimis doctrine.  Of course, the million-dollar question is how much time is considered de minimis.  Unfortunately, there is no bright-line rule and the answer may differ under federal law and California law, or ...

We have written here about the efforts of several gig economy companies like DoorDash to avoid having to conduct – and pay for – thousands of individual arbitrations alleging that their workers had been misclassified.

As we have said before, companies that implement arbitration agreements with class action waivers must be careful what they ask for.  By using such agreements, they run the risk of dozens, hundreds or even thousands of individual arbitrations, the cost of which could threaten the companies’ very existence.  (In California, we estimate that the arbitration costs ...

California generally requires that, when employees accrue vacation time during their employment, any accrued but unused vacation time must be paid out at the end of employment.  But so-called “unlimited” vacation policies have generally been understood to be a potential exception to that rule.  Such “unlimited” policies are more accurately referred to as “professional” or “reasonable use” vacation policies, where such policies do not provide for vacation to accrue.  Instead, employees under such policies are allowed to take an unspecified amount of paid time ...

In Viet v. Le, No. 18-6191, the U.S. Court of Appeals for the Sixth Circuit provided insight into the kind of evidence employees must present in order to create a jury question over whether they worked unpaid overtime in violation of the Fair Labor Standards Act (“FLSA”).

In the case, plaintiff Quoc Viet purchased used copiers in the United States and shipped them to Vietnam for resale by the defendants Victor Le and Copier Victor, Inc.  Copier Victor classified Viet, who worked from his home and a nearby warehouse, as an independent contractor.  Le paid Viet a fixed rate for each copier ...

Due to the COVID-19 pandemic and the resulting shelter-in-place and related orders, many businesses across America have already shuttered, while others are on the brink of collapse.  In these challenging times, businesses are understandably considering any and all potential solutions to keep their employees on payroll while remaining solvent.  Some employers have even been considering converting their W-2 employees to 1099 independent contractors.  The surface appeal is simple, which is that employers can avoid employment taxes, benefit costs, and overtime compensation ...

The U.S. Department of Labor (“DOL”) has renewed its invitation to employers and employees to engage in a “national online dialogue” in connection with the Families First Coronavirus Response Act (FFCRA), which took effect on April 1.  The DOL is soliciting comments and questions with respect to its questions and answers, posters, and fact sheets that it has published in connection with the FFCRA.

The DOL has also extended the deadline from March 29 to April 10 for employers and employees to provide input online at https://ffcra.ideascale.com.

Employers may want to speak ...