Wage and Hour Defense Blog

A little over two years ago, the U.S. Court of Appeals for the Fifth Circuit became the first federal appellate court in the country to reject the widespread and longstanding two-step approach of first “conditionally” certifying Fair Labor Standards Act (“FLSA”) collective actions under a very lenient, plaintiff-friendly standard, followed by applying more rigorous scrutiny after the close of discovery at the “decertification” or “final certification” stage.  As we discussed here, the Fifth Circuit concluded in Swales v. KLLM Transport Services, LLC that the FLSA requires not two steps, but instead a single step that carefully examines whether the group of workers at issue is “similarly situated” before a court authorizes any notices to potential opt-in plaintiffs.

work | \ wərk \ (noun):  activity in which one exerts strength or faculties to do or perform something

In common parlance, the concept of “work” connotes some physical or mental exertion.  The law, however, defines the term more broadly, and properly compensating employees often is not as simple as paying for all time spent performing “work” in the usual sense of that term.  The Fair Labor Standard Act (“FLSA”) and the laws of many states require employers to also pay for certain periods of time during which employees are idle and simply waiting to begin working—even if those employees never become engaged in work. 

On March 10, 2023, a unanimous three-judge panel upheld an Oregon federal court’s ruling that time Amazon employees spent undergoing mandatory security screenings before and after work shifts and off-premises meal breaks was not compensable, as the screenings were not integral and indispensable to their jobs under state law.

Following the California Supreme Court’s remand of Naranjo v. Spectrum Security Services, Inc., the California Court of Appeal in that same case held that the defendant-employer had not committed “knowing and intentional” violations of the wage statement statute by not including meal period premiums on the wage statements and had not “willfully” paid all wages due at the end of employment by not previously paying meal period premiums that were owed. The Court held that, although the employer did not prevail on its defense that employees in a certified class action were subject to valid on-duty meal period agreements, neither waiting time penalties (capped at 30 days’ of wages at the daily rate of pay for each former employee) nor wage statement penalties (capped at $4,000 per employee) could be imposed against the employer given the good faith dispute that any meal period premiums were owed.

The Washington, D.C. Council (the Council) has yet again taken action to delay enforcement of Initiative 82, the District’s new law to eliminate the use of the “tip credit” for certain service industry employees by July 1, 2027.

Gratuities are often helpful for both employees and their employers: tips supplement a worker’s income, and federal law and the laws of most states allow employers to credit a portion of a worker’s tips toward the company’s minimum wage obligations. But what exactly is a tip and how do employers take this so-called “tip credit?”

What is a tip or gratuity?

As we reported earlier this week, on February 22, 2023, the Supreme Court issued its decision in Helix Energy Solutions Group, Inc. v. Hewitt, finding that a daily-rate worker who earned over $200,000 annually was not exempt from the Fair Labor Standards Act’s (FLSA or Act) overtime requirements. The Court reasoned that, although the employee’s compensation exceeded the amount required under 29 C.F.R. § 541.601’s highly compensated employee (HCE) exemption, and he customarily and regularly performed at least one exempt duty (there, the “executive” duty of supervising a crew of workers), his employer did not pay him on a “salary basis” because he did not “receive a fixed amount for a week no matter how many days he … worked.”

Practically, Helix’s holding is unlikely to have broad consequences. Most employers pay employees who earn enough to qualify as an HCE (currently, $107,432 annually) and perform at least one exempt administrative, executive, or professional duty a predetermined salary. But employers who have classified non-salaried high earners as exempt HCEs will acutely feel its effects.

The Ninth Circuit has issued its long-awaited ruling in Chamber of Commerce v. Bonta, perhaps putting a nail in the coffin of the controversial California law known as AB 51, which would have made it criminal conduct to require an applicant or employee to sign an arbitration agreement.

The history of AB 51 and the case challenging it is a tortuous one, to say the least, but the issue has always remained the same: was the California legislature too clever in its attempt to circumvent the Federal Arbitration Act (“FAA”) and the Supreme Court’s landmark decision in Epic Systems?

More than a decade ago, Epstein Becker Green (EBG) created its complimentary wage-hour app, putting federal, state, and local wage-hour laws at employers’ fingertips.

The app provides important information about overtime exemptions, minimum wages, overtime, meal periods, rest periods, on-call time, travel time, and tips that employers can use to remain compliant with the law—and, hopefully, to avoid class action, representative action, and collective action lawsuits and government investigations. 

Generally speaking, the FLSA requires that employers pay employees the required minimum wage and overtime for all hours worked in excess of 40 hours in any workweek (at a rate of one and one-half times the employee’s regular rate of pay). Accordingly, courts have consistently held that the FLSA provides employees with a basis to sue for the recovery of unpaid wages if an employee is paid below the required minimum wage or an employee is not adequately compensated for overtime hours worked in excess of 40 hours.

But what about claims that do not fit neatly into either of those two buckets? Cue in gap-time claims.