Proposed Revisions Pertaining to Federal Overtime Regulations

By Chelsea K. Painter

On Tuesday, June 30, 2015, in an attempt to “modernize and streamline” the regulations on exemptions from the Fair Labor Standards Act’s (“FLSA”) minimum wage and overtime pay requirements, the U.S. Department of Labor issued a Notice of Proposed Rulemaking (“NPRM)” which focuses primarily on increasing federal overtime pay regulatory coverage to nearly 5 million people by raising the minimum salary threshold required to qualify for the FLSA’s “white collar” exemption. Specifically, the Department proposes to:

1. Set the standard salary level at the 40^th percentile of weekly earnings for full-time salaried workers ($970 a week; or $50,440 a year) in 2016;
2. Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90^th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
3. Establish a mechanism for automatically updating the salary and compensation levels going forward so as to ensure a useful and effective test for exemption.

 

The Department’s regulations have generally required each of the following three tests to be met for the white collar exemptions to apply: 1) the employee must be paid a predetermined, fixed salary that is not subject to

Kentucky Court of Appeals Rules That Kentucky Wage and Hour Statute Does Not Permit Class Actions

By Michelle D. Wyrick

In an important ruling for employers, on February 27, 2015, the Kentucky Court of Appeals ruled that KRS 337.385 does not permit individuals to pursue claims for unpaid wages and overtime in Kentucky as class actions. See McCann v. The Sullivan University System, Inc., No. 2014-CA-000392-ME. The Court relied on the language in KRS 337.385(2) stating that actions for unpaid wages and overtime may only be maintained by one or more employees “for and in behalf of himself, herself, or themselves.” The Court concluded that this language does not permit plaintiffs to pursue claims for unpaid wages and overtime compensation in a representative capacity.

The Court contrasted the language in KRS 337.385 and the Fair Labor Standards Act, which expressly permits plaintiffs to

Court Invalidates Rule Extending the FLSA’s Minimum Wage and Overtime Requirements to Home Health Care Workers Employed by Third Parties

By Brittany L. Hampton

The U.S. District Court for the District of Columbia struck down the U.S. Department of Labor’s regulations concerning the companionship services exemption to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). See Home Care Association of America v. Weil, No. 14-cv-967 (D.D.C. 2014). Under the FLSA, providers of home care services employed by a third party are deemed to fall within the FLSA’s domestic employee and/or companionship services exemptions. However, the Department of Labor’s Wage and Hour Division issued a Final Rule with an effective date of January 1, 2015 (but not to be enforced until July 1, 2015) effectively eliminating this exemption by revising the definition of “companionship services” and subjecting third-party providers to minimum wage and overtime requirements imposed by the FLSA.

The National Association for Home Care & Hospice, Home Care Association of America, and the International Franchise Association brought an action challenging the Final Rule under the Administrative Procedure Act arguing that the rule was arbitrary and capricious, and inconsistent with Congress’ intent. Specifically, the plaintiffs claimed the rule would “have a destabilizing impact on

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. According 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

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.

The 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

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.

Minimum Wage and Overtime Laws to be Applied to Home Care Employees

By Douglas L. McSwain

The U.S. Department of Labor (DOL) has adopted a new final regulation that extends minimum wage and overtime protections to direct care employees of home care agencies and other third parties.  Direct care workers include those who provide essential home care services such as home health aides, personal care aides, and certified nursing assistants.  An estimated two million additional direct care workers in the U.S. are expected to be covered by this new rule.

The final regulation will take effect January 1, 2015, so employers have time to consider its implications unless their direct care workforces are already covered by a state minimum wage or overtime law.  Fifteen states extend both minimum wage and overtime protection to direct care workers, and an additional six states, plus the District of Columbia, extend minimum wage protection. 

The DOL’s new regulation does not sweep within its protection every person who provides companionship services or assists another within a home setting.  Many comments were submitted to the DOL raising questions about the potential scope of the proposed rule, particularly as to its potential impact on those who merely provide companionship. The result in the DOL’s final rule was to extend protection to those performing medically-related services for which training is typically a prerequisite, but not to workers who are employed only by the person receiving services or his/her family or household and who primarily perform fellowship and protection activities, or care incident to these activities, such as providing company, visiting or engaging in hobbies, etc., with the person receiving services.