In Sandifer v. U.S. Steel Corp., the U.S. Supreme Court held that the FLSA does not require unionized employers to compensate employees for time spent putting on and taking off certain protective clothing if they have a collective bargaining agreement that excludes this time as compensable work time.

The U.S. Department of Labor’s regulations have long-required employers to pay employees for time spent changing into protective gear and equipment, as well as the time spent taking it off, if that gear is required to perform the job. But under Section 203(o) of the FLSA, employers do not have to pay employees for time spent “changing clothes or washing at the beginning or end of each workday” if a “bona fide collective-bargaining agreement” excludes that time as compensable work time.  The question before the Supreme Court was whether a specific list of items could be considered “clothes” within the meaning of Section 203(o): flame-retardant jackets, pants, hoods, hardhats, “snoods,” “wristlets,” work gloves, leggings, steel-toe boots, safety glasses, earplugs, and a respirator.

The Court found that with the exception of safety glasses, earplugs, and respirators, these items fell within Section 203(o)’s clothes exception and the time spent putting them on and taking them off was not compensable work time if the labor contract so excluded it. The Court reasoned that while these items had protective qualities, these items “are commonly regarded as articles of dress.” For example, according to the Court, a “hardhat is simply a type of hat.” On the other hand, safety glasses, earplugs, and respirators are not commonly regarded as articles of dress. 

Additionally, the Court also held that employers do not have to compensate employees for time spent putting on and taking off protective items—even if they are not clothes within the meaning of Section 203(o)—if the vast majority of their time before and after their primary work duties involves changing into and out of clothes that do meet Section 203(o)’s definition of “clothes.” In other words, “if the vast majority of the time is spent in donning and doffing ‘clothes’ as defined [in Sandifer], the entire period qualifies [as non-compensable time], and the time spent putting on and off other items need not be subtracted.” 

Although the Court’s decision in Sandifer definitely falls in the win column for employers, it seems to leave open a number of questions. For example, why is a hardhat merely a “type of hat” and classified as clothing, rather than as a piece of protective equipment, when hardhats are almost always worn only for protection for certain jobs? How are hardhats (clothing) any different than safety glasses (protective equipment)? Given the Court’s rather strained reasoning over what constitutes “clothes,” the Court gave little guidance to determine what else fits within Section 203(o)’s exception besides the items it specifically considered in Sandifer. Even the Court acknowledged “that it may be impossible to eliminate all vagueness when interpreting a word as wide-ranging as ‘clothes.’” And what happens if the time putting on and taking off compensable protective items and non-compensable clothes is roughly even? Is this paid or unpaid time under Sandifer? 

Despite these lingering questions, employers must remember that this ruling only applies to employers with unionized workforces with the necessary language in a collective bargaining agreement. Nonunion employers must always pay employees for time spent changing into and out of protective gear and equipment that is required to perform their jobs. 

Unionized employers should proceed with caution after Sandifer and evaluate what items employees put on before they work and take off after, and consider whether the time spent do so should be paid work time or not.

Supreme Court.jpgIn the 2013 – 2014 Supreme Court term, the Court will hear and decide a number of cases affecting employers, including one FLSA case. 

Sandifer v. U.S. Steel Corp.: The Court will consider what constitutes “changing clothes” under the FLSA. Under §203(o) of the FLSA, an employer need not compensate a worker for time spent changing clothes if that time is excluded from compensable time under a collective bargaining agreement. However, also under the FLSA, an employee must be paid for engaging in a “principal activity,” and putting on and taking off safety gear required by the employer may be a principal activity if it is an integral and indispensable part of the activities for which the worker is employed. In this case, employees at U.S. Steel Corp in Gary, Indiana brought suit under the FLSA claiming that they should be compensated for time spent changing into their work gear and traveling back and forth to the locker room. They argued that what they change into—flame retardant pants and jacket, work boots, hard hat, safety glasses and ear protection—was safety gear, not clothing as contemplated by the FLSA. The Court of Appeals disagreed and denied the claims. This case may clarify when an employer must pay employees for putting on and taking off safety gear at the beginning and end of their shifts.

With the federal government’s partial shutdown in its third day, many federal agency operations have been affected. Among them, the Department of Homeland Security (DHS) has suspended its E-Verify service until Congress reaches an agreement to restore funding. Importantly, although E-Verify is temporarily not operating, employers must still properly and timely complete Form I-9 for any new hires within three days pursuant to the 1986 Immigration Reform and Control Act (IRCA). Employers should also prepare to process any backlog of new hires in E-Verify when the service resumes.

According to the Department’s E-Verify site, the shutdown will prevent employers from:

  • Enrolling or Terminating enrollment in E-Verify
  • Verifying the employment eligibility of any person
  • Viewing or taking action on any case
  • Adding, deleting or editing any User ID
  • Resetting passwords
  • Editing company information
  • Running reports
  • Viewing “Essential Resources”

In addition, E-Verify Customer Support and related support and training services are closed, meaning that employees with Tentative Nonconfirmations (TNCs) cannot resolve them. DHS has suspended its “three-day rule” for E-Verify cases affected by the shutdown, and the Department will provide additional guidance on processing new hire backlogs after operations resume. 

Additionally, days during the shutdown will not count toward the eight workdays during which employees may resolve TNCs. Employers may not take any adverse action against an employee because of an E-Verify interim case status, and that includes extended interim case statuses due to a federal government shutdown. Federal contractors complying with E-Verify rules pursuant to a federal contract should contact the proper contracting officer to discuss the impact of any extended deadlines. 

During the shutdown, employers who use E-Verify should maintain a list of new hires for processing as soon as E-Verify service resumes. Employers must closely monitor the shutdown and any guidance DHS issues after restoring operations. Employers should also notify any employees who are still resolving TNCs about the extra time granted by the Department. We are happy to provide additional assistance to employers with questions about compliance with IRCA, completing Form I-9, using E-Verify, or dealing with ICE worksite enforcement actions during and after the government shutdown.

DOL Perez.jpgThe last three days have brought a flurry of important developments for employers. On Wednesday, the Fourth Circuit joined the D.C. Circuit (Noel Canning) and Third Circuit (New Vista Nursing) in overturning President Obama’s January 2012 recess appointments of Members Richard Griffin, Terrence Flynn (who has since resigned), and Sharon Block to the National Labor Relations Board. In NLRB v. Enterprise Leasing Company Southeast, the Fourth Circuit largely agreed with its sister courts, concluding that “the term ‘the Recess,’ as used in the Recess Appointments Clause, refers to the legislative break that the Senate takes between its ‘Session[s].’ In other words, the term ‘the Recess’ means the intersession period of time between an adjournment sine die and the start of the Senate’s next session.” The D.C. Circuit’s Noel Canning decision is currently pending before the Supreme Court. 

The Fourth Circuit’s ruling comes on the heels of the Senate’s announcement of a compromise on several of President Obama’s nominees, including controversial Department of Labor Secretary Thomas Perez. The Senate confirmed Mr. Perez yesterday by a slim 54-46 margin. He previously served as an Assistant Attorney General in the Department of Justice’s Civil Rights Division and headed Maryland’s Department of Labor.

Another part of the compromise hammered out by Senators includes returning a full complement of five members to the National Labor Relations Board late this summer. President Obama has agreed to withdraw his February 2013 nominations of recess appointees Griffin and Block and to replace them with Democrats Kent Hirowaza and Nancy Schiffer. 

Mr. Hirozawa is currently chief counsel to Chairman Pearce. Before joining the NLRB staff in 2010, he was a partner in a labor-side law firm in New York City. Mr. Hirozawa previously served as a field attorney for the NLRB from 1984 to 1986, and as a pro se law clerk for the U.S. Court of Appeals for the Second Circuit from 1982 to 1984. He will be appointed to former Member Liebman’s seat, and his term would expire in August 2016. 

Ms. Schiffer was Associate General Counsel to the AFL-CIO from 2000 to 2012, after spending nearly twenty years as Associate and later Deputy General Counsel at the UAW. Earlier in her career, Ms. Schiffer was a staff attorney in the NLRB’s Detroit Regional Office and worked in private practice. President Obama is nominating her to fill former Member Becker’s seat, meaning that her term would expire next August. 

The other nominees we discussed in April, Republicans Philip Miscimarra and Harry Johnson, III and current Chairman Mark Gaston Pearce, a Democrat, will also be confirmed as part of the Senate deal. News outlets are reporting that the President will soon nominate Member Griffin as the Board’s new General Counsel. The White House has not made any announcements about the futures of Member Block or current Acting General Counsel Lafe Solomon, who was nominated two years ago but never confirmed by the Senate.

Guest Blogger: Mark Wilkinson 

In 2012, the EEOC published its strategic enforcement plan in which the agency identified its priorities for the years 2013 to 2016. The EEOC listed accommodating pregnancy-related limitations as an emerging issue and a national priority on which it intended to focus. That focus has already paid dividends for the agency in EEOC v. Houston Funding II Ltd., where the Fifth Circuit Court of Appeals held that firing a woman because she is lactating or expressing milk constitutes unlawful gender discrimination under Title VII of the Civil Rights Act of 1964 (as amended by the Pregnancy Discrimination Act of 1978). The Pregnancy Discrimination Act amended Title VII to prohibit employment discrimination based on pregnancy, childbirth, or related medical conditions. 

In Houston Funding, an account representative became pregnant and went out on maternity leave. In anticipation of her return to work, the employee asked her boss if she could use her breast pump at work in the back room of the office. The employee claimed the boss denied her request and then later told her that her position had been filled. A few days later, the employee received a letter terminating her employment citing job abandonment. The employee sued claiming gender discrimination under Title VII. 

The trial court dismissed the case on the employer’s motion for summary judgment reasoning that lactation was not a condition related to pregnancy because it did not start until the pregnancy had ended. Courts have generally interpreted Title VII not to require special workplace accommodations for women affected by pregnancy, childbirth, or related medical conditions and only require employers to treat women the same as other employees who may have similar limitations or inabilities to work. 

On appeal, the Fifth Circuit reversed the lower court and remanded the case back for trial. The appellate court held that lactation is a physiological condition distinct to women who have undergone pregnancy. According to the court, firing a woman because she is lactating or expressing milk amounts to unlawful gender discrimination under Title VII and the Pregnancy Discrimination Act because an employer—as a matter of biology—could not fire a man for the same reason. 

While the EEOC’s victory in Houston Funding seems like a common-sense result, it represents a significant development for the agency and its efforts to pursue pregnancy discrimination claims. Additionally, in 2010, Congress amended the Fair Labor Standards Act to require employers with 50 or more employees to provide breaks for nursing mothers to express breast milk for one year after a child’s birth. (Although not clear from the court’s decision, the employer in Houston Fundinglikely had less than 50 employees.) The amendment also requires employers to provide a private place, other than a bathroom, where nursing mothers can express breast milk. The EEOC, however, does not enforce the FLSA and employees cannot file employment discrimination charges for alleged FLSA violations. They would have to sue directly in court. 

Given the EEOC’s focus on pregnancy discrimination and the Fair Labor Standards Act’s requirements relating to nursing mothers, employers should tread lightly when evaluating employment issues involving pregnant employees.

Q. Summer has arrived and many employers have already supplemented their operations with student interns, but the question we see crop up repeatedly is, “do I have to pay interns?” 

A. In the last few years, with a more competitive job market and corporate focus on reducing costs, we have seen an increase in the use of unpaid interns.  Unfortunately, not all internships can be unpaid.  

Several high-profile employers currently face wage and hour collective actions brought by former interns who now claim they should have been paid during their internship.  The entertainment industry is currently under attack for its longstanding use of unpaid interns.  For example, former interns are currently suing Fox Searchlight pictures for unpaid wages on the set of the movie, Black Swan. See, e.g., Glatt et al., v. Fox Searchlight Pictures Inc., No. 11-6784.pdf (S.D. N.Y. June 11, 2013) (where after analyzing the DOL’s six-factor test and considering the totality of the circumstances, the court determined that some of the plaintiffs were improperly classified as unpaid interns and were “employees” covered by the FLSA and a similar state statute).

While the courts continue to wrestle with how to treat unpaid interns, the United States Department of Labor has provided employers with some guidance.  Public employers and not-for-profit entities do not have to pay their interns.  On the other hand, private employers, must meet a six-factor test in order for an internship to qualify as unpaid under the Fair Labor Standards Act:

  • Is the internship similar to training given in an educational environment?
    • For instance, could the intern pay to receive this kind of training somewhere else?
    • The more an internship program is built around the classroom or academic experience, as opposed to the employer’s actual operations, the greater the chance the internship will be considered an extension of the student’s educational experience.
  • Is the internship experience for the benefit of the intern?
    • College credit is a strong indicator that the intern benefits from the experience, but will not be dispositive.
    • Does the intern receive a real benefit from the internship (like learning a skill transferrable to other employers)?
  • Does the intern work alongside regular employees (and not otherwise displace them) under close supervision of existing staff?
    • Interns cannot fill in for regular employees who want take time off or who are on leave and employers cannot use interns to add to the workforce during peak periods.
    • Job shadowing where the intern performs little or no work looks like a bona fide training and educational experience. 
  • Does the intern not provide the employer with any immediate advantages or services?
    • Technically, this means that interns cannot perform any menial tasks like deliver mail, sort files, fetch coffees, or run errands.
    • This requirement of the test is the most difficult and controversial and a couple courts have rejected it altogether.  See Solis v. Laurelbrook Sanitarium & School Inc., 642 F.3d 518 (6th Cir. 2011) (“the proper approach … is to ascertain which party derives the primary benefit from the relationship”); McLaughlin v. Ensley, 877 F.2d 1207 (4th Cir. 1989) (general test in the Fourth Circuit is whether the employee or the employer is the primary beneficiary of the intern’s labor). 
  • Does the intern understand that they are not entitled to a job at the conclusion of the internship?
    • Unpaid internships should have a fixed duration established prior to the start.
    • An internship should not be used as a trial or probationary period for job-seekers.
  • Do both the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship?
    • The label “intern” or “trainee” does not matter under the FLSA and job titles are largely irrelevant—only the duties that persons perform matter.
    • A person cannot “agree” to be an unpaid intern.

As a flowchart, the DOL’s test looks like this:

interns.jpg

Employer Insight

Given the activity in this area from the plaintiff’s bar, employers should take a hard look at their unpaid internship programs and evaluate them against the DOL’s six-factor test.  An internship agreement or acknowledgement form tailored to the factors in the test is a good start, but employers should remember that persons cannot waive the protections of the FLSA.  So, an agreement will not necessarily resolve the question.  Employers that have come to rely on the contributions of interns each summer or during school semesters will likely have a hard time justifying their internship program as unpaid, even if every other employer in the industry does the same thing. 

On May 8, the House of Representatives passed a bill that would allow private sector employers to offer hourly workers the option of taking compensatory (“comp”) time in lieu of paid overtime.  The bill seeks to amend the Fair Labor Standards Act to allow private sector employers to offer comp time at a rate of 1.5 hours per hour of overtime worked instead of paying cash wages at time-and-a-half the employee’s regular rate for all hours worked over 40 in a workweek.

Under the bill, such a comp time arrangement would need to be agreed to in writing by both the employer and employee.  Any unused comp time would be paid out at the end of each year, and employees would also be allowed, upon request, to “cash out” any accrued comp time.

Although there is currently no companion bill in the Senate, Republican backers have touted the bill as a commonsense approach for the 21st Century that provides workers with the flexibility needed to balance family and work obligations.  Private sector employees would now have the same flexibility as public sector employees (who are legally allowed to be offered comp time) to take such comp time to care for a sick child or chaperone their child’s field trip.  Conversely, Democrats claim the bill gives too much leeway to employers as to when the comp time can be taken and may lead employers to favor workers who choose a comp time arrangement in lieu of cash payment. 

We will have to wait and see if this measure picks up steam in the Senate.  In the meantime, it is important to remember that this bill is not law.  So if you are a private sector employer, you cannot offer comp time to your employees in lieu of paying overtime.  Private sector employers must pay their non-exempt employees 1.5 times their regular rate of pay for all overtime hours worked.

Guest Author: Lindsey Marcus

Supreme Court building.JPGSome good news for employers. In a recent 5-4 opinion, the U.S. Supreme Court held that collective-action claims brought under the Fair Labor Standards Act (FLSA) are moot when the named plaintiff has no continuing personal interest in the outcome of the lawsuit and no motion for conditional certification has been filed.  Genesis Healthcare Corp. v. Symczyk, Case No. 11-1059.

Relevant Facts

Laura Symczyk, a registered nurse, sued her former employer, Genesis Healthcare Corp. (Genesis), for violations of the FLSA. Specifically, she alleged that Genesis violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks, even when the employees performed compensable work during those breaks. Symczyk sought damages on behalf of herself and other similarly situated individuals using the so-called “collective action” mechanism prescribed in the FLSA, though no other such individuals had consented to join the suit and no motion for conditional certification had been filed.

When Genesis answered the complaint, it offered Symczyk $7,500 plus attorney’s fees and costs, an “offer of judgment” under the Federal Rules of Civil Procedure (FRCP). After Symczyk failed to respond to the offer, Genesis moved to dismiss the complaint by arguing that since it had offered Symczyk complete relief for her individual claims, she no longer had a personal stake in the litigation. Absent a personal stake in the claim, the lawsuit was moot. Both the district court and the U.S. Court of Appeals for the Third Circuit agreed that Symczyk’s individual claims were moot in light of the offer of judgment. The Third Circuit, however, held that Symczyk’s collective action was not moot because such calculated attempts by a defendant to “short-circuit” collective actions by “picking off” named plaintiffs with strategic offers of judgment would frustrate the goals of the collective-action process. The Supreme Court reversed the Third Circuit, rejecting the idea that the purpose of the FLSA would be frustrated. 

Analysis

As an initial matter, the Court held that it could not decide whether the unaccepted offer of judgment rendered Symczyk’s case moot since she did not challenge the lower courts’ rulings and did not properly preserve the issue on appeal to the Supreme Court. The Court therefore did not decide the question of whether Symczyk’s individual claim was moot based on the unaccepted offer of judgment. Rather, the Court assumed that Symczyk’s claim was moot based on the offer of judgment in deciding the question before it, i.e., whether her collective-action claims remained in controversy after her individual claims had been mooted.

Turning to the merits, Court held that the collective-action claims did not remain in controversy for a number of reasons. First, the Court differentiated between class actions under FRCP 23 and collective actions under the FLSA. In class actions, similarly situated individuals who are not named as plaintiffs are considered part of the class—and therefore bound by the court’s judgment—unless they affirmatively opt out. In contrast, in collective actions, individuals who are similarly situated to the named plaintiffs are not part of the suit unless they affirmatively agree to join it. Consequently, when a court certifies a class under FRCP 23, the class acquires a “legal status” of its own. On the other hand, conditional certification under the FLSA merely means that notice and an opportunity to opt in to the suit are sent to the putative collective-action members. Therefore, the Court reasoned, if no one has consented to join the collective action at the time of the offer of judgment, no one has a personal interest in the outcome of the suit as required to keep the suit alive.

Second, the Court rejected Symczyk’s argument that her collective-action claims related back to the date of the complaint because Genesis’ offer of judgment made the claims “inherently transitory.” In other words, Symczyk argued that it was possible that no plaintiff would have a personal stake in the suit long enough for the litigation to run its course if the defendant could “pick off” named plaintiffs before the collective-action process was complete. This rationale, the Court explained, only applies where the challenged conduct is effectively unreviewable, not to a defendant’s litigation strategy. If putative FLSA collective-action members do not consent to join the suit before it is resolved, they remain free to bring their own lawsuits against the defendant to vindicate their rights.

Finally, the Court rejected Symczyk’s argument that the purposes of the FLSA’s collective-action mechanism would be frustrated by allowing offers of judgment to named plaintiffs to moot a collective action before the process had run its course. Distinguishing prior case law on class actions under FRCP 23, the Court found that Symczyk had not asserted that she had any continuing economic interest in the outcome of the case—such as shifting a portion of the attorney’s fees to the other putative collective-action members—and therefore could not continue to represent these individuals as the named plaintiff.

Insights for Employers

Symczyk is important for what it says about the Court’s attitude toward claims asserted on behalf of a group as well as for what it actually holds. In the past several terms, the Court has issued multiple opinions narrowing the ability of plaintiffs to bring class actions, such as its 2011 decision in Walmart Stores, Inc. v. Dukes.  As one Supreme Court observer noted, Symczyk extended this trend to FLSA collective actions. 

Conversely, this opinion may actually come back to bite employers by pushing  plaintiffs’ attorneys to move more quickly to seek opt-in consents and file a motion for conditional certification to avoid falling victim to the “pick off” strategy used in this case. Although the opinion sanctions an employer’s right to use this strategy, employers must proceed with caution when making early offers of judgment because doing so may result in having to defend multiple lawsuits. Other plaintiffs who might have opted in to the original litigation are still free to file their own lawsuit. In addition, since the Court did not decide whether an unaccepted offer of judgment moots an individual plaintiff’s claims, this issue remains the subject of a split among the Courts of Appeal.

As our readers know, we often suggest that employers conduct an internal audit of their timekeeping and overtime policies to avert such lawsuits altogether. Symczyk is just another reminder of the complexities of federal and state wage and hour laws and the benefits of conducting such an audit to ensure compliance with these laws.

thomas.perez.jpgThis morning, President Obama formally nominated Thomas Perez to be the next Secretary of the Department of Labor.  Mr. Perez, an assistant U.S. Attorney General, will replace outgoing Secretary Hilda Solis.  Mr. Perez’s nomination is widely supported by the labor community. 

Mary Kay Henry, the president of the Service Employees International Union (SEIU), stated on NBCNews.com’s First Read: 

President Obama has made an excellent choice in nominating Thomas Perez to lead the U.S. Department of Labor.  During his time as Labor Secretary in Maryland, Mr. Perez’s had a strong record of enforcing labor laws, especially wage and hour and other violations that stood in the way of workers earning a fair wage. Enforcing these labor laws help to close the income gap between the wealthy and everyone else.

While we will learn more about Mr. Perez during the confirmation process, it does seem likely that the DOL’s wage and hour initiatives will continue under his leadership.

iStock_Nanny_XSmall.jpgAs a working mom, I am lucky to have a husband who is a stay-at-home parent.  Rarely do I have to worry about being late to work because I have to drop my child off at school, or leaving work early to take my child to an after-school activity or doctor’s appointment.  However, many of my co-workers, friends and neighbors employ nannies to watch their children while both parents work all day.  Most of the nannies I know do not live at the family’s house, but they can work long and varied hours.  Nannies are generally paid hourly or are given a weekly salary intended to cover all hours worked.  Recently, I have discovered that many of those who employ nannies do not realize that their nannies are entitled to minimum wage and overtime protection under the FLSA just like any other non-exempt employee.

While the FLSA does not use the modern term “nanny,” the regulations specifically provide that domestic services employees (housekeepers, maids, governesses, etc.) are non-exempt employees covered by the FLSA.  This definition also includes babysitters employed other than on a casual basis (i.e., a few hours or less a week).  Nannies must be paid at least minimum wage for all hours worked, and overtime compensation coverage depends on whether the nanny lives on the premises or lives outside the home.  A “live-in” nanny must receive at least minimum wage for each hour worked but need not receive overtime for hours worked over 40 in a work week.  On the other hand, a nanny who lives outside the home must receive at least the minimum wage for all hours worked and be paid overtime (time-and-a-half) for those hours worked over 40 in a workweek.  It does not matter if the nanny is paid an hourly wage or salary – if the nanny is entitled to overtime, his/her wage will need to be converted to an hourly rate to determine the proper overtime compensation.

In general, hours worked includes all time the nanny is required to be at the employer’s home, the time spent away from the home during which the nanny is performing services, and all time that the nanny is required to be “on call” in the course of his/her duties.  “Down time” will not be considered working time if the nanny is completely relieved from duty and the period is long enough for him or her to engage in personal activities.  However, it is important to note that if the nanny is required to remain on the premises during meal time or remains “on call” for school emergencies, this would likely be considered “hours worked” for overtime purposes.

The rules governing compensation of domestic services employees can be complicated, particularly for those employers who are not familiar with the FLSA requirements.  The proper compensation of domestic service employees has piqued the interest of the Department of Labor, as well as the employees themselves.  These days, employees are more knowledgeable about their right to minimum wage and overtime.  So if you employ a nanny, it might be beneficial to review your payment records to ensure that he/she is being properly compensated.