On November 20, 2009, the Second Circuit decided Davis v. J.P. Morgan Chase & Co., 2009 U.S. App. LEXIS 25481 (2d Cir.  Nov. 20, 2009), wherein it reversed a summary judgment finding against a loan underwriters who allege that they are entitled overtime pay under the FLSA.  The Court flatly rejected the district court’s holding that such employees are covered by the FLSA’s administrative exemption.  This is an important victory for loan underwriters, loan officers, staff accountants, non-licenced accountants, bank tellers, and other financial service employees who are frequently misclassified as FLSA exempt.  The Court emphasized that, to fall within the administrative exemption, employees perform work that is related to the management policies or general business operations.  In other words, true administrative employees are “at the heart of the company’s business operations,” and those “functional” employees who perform day-to-tasks of the business – even if those tasks are comples — are not covered by the exemption.  In sum, this is a big victory for the plaintiffs and their New York overtime lawyers.    

On November 17, 2009, Judge Claudia Wilken of the Northern District of California issued an extraordinarily thoughtful opinion in a case involving the overtime rights of bank employees.  Judge Wilken explained that employers who misclassify employees as exempt from overtime cannot retroactively use the dreaded Fluctuating Workweek Method (“FWM”) of overtime compensation to calculate overtime damages.  After summarizing the legal landscape in great detail, the Judge explained that it is impossible for the employer to retroactively satisfy the FWM’s prerequisites when, in fact, it never paid overtime to the misclassified employees in the first place.  The case is published at Freedman v. Wells Fargo & Co., 2009 U.S. Dist. LEXIS 107044 (N.D. Cal. Nov. 17, 2009), and it is a must-read for any trial lawyer litigating FLSA misclassification cases.

Here are brief summaries of three FLSA cases that were decided on November 25, 2009: 

The Seventh Circuit Court of Appeals affirmed summary against an FLSA class of Wisconsin paper mill employees who brought an overtime lawsuit alleging that the employer failed to pay them for: (1) time spent putting donning and doffing on and their work clothes, safety shoes, and safety glasses before and after each workday; (2) time spent showering after each workday; and (3) time spent shaving.  The court held that such activities were non-compensable preliminary and postliminary activities under the Portal to Portal Act (“PPA”).  Nothing is particularly notable in this straightforward and short opinion, which does contain a concise summary of basis PPA principles.  See Musch v. Domtar Indus., 2009 U.S. App. LEXIS 25809 (7th Cir. Nov. 25, 2009).

A Southern District of Texas judge refused decertify an FLSA collective action, wherein the employees alleged that the company failed to pay them regular and overtime pay for time spent preparing for ant taking “skills-assessment tests.”  The courts also denied most aspects of the company’s summary judgment motion.  The opinion contains a good discussion of when employee training is compensable under 29 C.F.R. § 785.27 and the pertinent caselaw.  There’s also a real good recital of the Fifth Circuit decertification standards, as the judge rejects many of the defense-bar’s standard decertification arguments and tactics, such as emphasizing “individualized” damages theories (even though damages issues are not supposed to be before the court at the decertification stage).  This opinion is worth reading.  See Maynor v. Dow Chemical Co., 2009 U.S. Dist. LEXIS 110031  (S.D. Tx. Nov. 25, 2009).

A Middle District of Florida judge refused to conditionally certify a class of call center employees who seek overtime pay.  See Tussing v. Quality Res., Inc., 2009 U.S. Dist. LEXIS 110190  (M.D. Fla. Nov. 25, 2009).  The judge emphasized that the affidavits submitted by the plaintiffs were “woefully insufficient” and was critical of the plaintiffs’ tactic of trying to certify in the same case employees that were classified as both exempt and non-exempt  from overtime.

Chief Judge Donetta Ambrose of the Western District of Pennsylvania recently granted conditional certification on behalf of an FLSA class of Pittsburgh, Pennsylvania hospital workers in Kuznyetsov v. West Penn Allegheny Health System, Inc., 2009 U.S. Dist. LEXIS 47163 (W.D. Pa. June 1, 2009).  There, the hospitals made an automatic 30-minute pay deduction for meal breaks.  See id. at *12-14.  The hospitals also required that employees who work during meal breaks report their work to the timekeeper so that the 30-minute deduction could be altered.  See id. at 13.  Based on these policies, Chief Judge Ambrose conditionally certified the FLSA class.  After emphasizing that it is the employer’s duty to affirmatively ensure that work is not performed during meal breaks, see id. at 14, the Court conditionally certified the class on grounds that “[a]rguably, [the hospitals'] policies shift the responsibility to the employees” in violation of the FLSA, id. at 14.  At the conditional certification stage, it did not matter that the hospitals had offered evidence of thousands of instances in which automatic deductions were cancelled.  See id.  Such evidence did not “alter[] the fact that the policies apply to all non-exempt employees and arguably shifts the responsibility to the employees to ensure that the deduction is cancelled.”  Id. at *15-16.Our law firm currently is representing hospital workers who allegedly were denied their full meal breaks in Philadelphia.  Feel free to give us a call if you have any questions or would like to discuss the legal rights of you or your clients.

The full panoply of wage and overtime rip-offs in the landscaping and construction industries are too vast to be covered by this mere Newsletter.  Notwithstanding, when you speak with your clients in the landscaping and construction industries, you should be on the lookout for the Company’s failure to pay for travel between the company headquarters and the work location.

Many landscaping and contracting companies require the workers to report to headquarters at the beginning of the workday.  There, the workers gather equipment and materials needed for the day’s project, load the company vehicle, and travel to the worksite.  Then, at the end of the day, the workers must return to headquarters, unload the vehicle, and perform other end-of-shift duties.

The illegality arises when the Company pays the workers only for the time spent on-site at the work location.  Under such circumstances, workers are cheated out of many hours of compensable work.  Indeed, we have represented clients who have been owed thousands of dollars for of unpaid travel time at the beginning and end of the workday.

The Department of Labor has enacted a regulation that specifically addresses travel during the (more…)

Our firm has successfully handled claims involving the overtime pay rights of drivers employed by bus companies that provide transportation to disabled and elderly passengers.  These bus companies often operate under contracts with local governments or local public transit agencies, and they employ thousands of drivers throughout Pennsylvania and elsewhere.

Many of our friends in the workplace injury bar know how hard these drivers work and how often they get hurt while lifting and assisting passengers.  But what about their overtime rights? 

For sure, many local bus companies pay their drivers the time-and-one-half overtime premium required under the Fair Labor Standards Act (“FLSA”), the Pennsylvania Minimum Wage Act (“PMWA”), and similar state laws.  Unfortunately, less-generous bus companies deny their drivers overtime pay by asserting that the drivers are covered by the Motor Carrier Act Exemption (“MCA Exemption”) to overtime coverage.

The FLSA and similar state overtime laws contain an MCA Exemption that applies to “employee[s] with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service.”  See, e.g., 29 U.S.C. § 213(b)(1); 43 P.S. § 333.105(b)(7).  But the MCA Exemption is not as broad as some employers think.  As the Department of Labor has explained, the MCA Exemption is strictly limited to employees who, among other things, “engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.”  29 C.F.R. § 782.2(a) (emphasis supplied); accord Dole v. Solid Waste Services, Inc., 733 F. Supp. 895, 929 (E.D. Pa. 1989).  In other words, for the MCA Exemption to apply, the drivers must be engaged in interstate commerce.

Therein lies the problem for many private bus companies throughout Pennsylvania and elsewhere.  In providing transportation services to disabled and elderly clients, the drivers almost never cross state lines.  This is especially true when the bus company’s service area lies well within a state’s boundaries.  But it also tends to hold true for bus companies that operate close to state borders.  Simply put, the day-to-day routines of most people – including most elderly and disabled people – rarely take them over state lines.

The case of Dauphin v. Chestnut Ridge Transportation, Inc., 544 F. Supp. 2d 266, 273 (S.D.N.Y. 2008), is instructive.  There, the federal judge carefully reviewed the pertinent legal authority and concluded that, for the MCA Exemption to cover a driver, the bus company must prove that the driver’s trips across state lines are “more than de minimis” or are “a ‘natural, integral and . . . inseparable part’ of” the driver’s job.  Id. at 275.

Here’s the bottom line:  If you represent drivers who currently or formerly worked for a local bus company, you should ask them three relevant questions:  (1) Did they ever work over 40 hours per week?  (2) On such occasions, did they receive time-and-one-half overtime pay?  (3) If they did not receive overtime pay, did they regularly drive over state lines?  If you client neither received overtime nor regularly drove over state lines, we would be delighted to provide the client with a free and confidential consultation.

In June 2008, Western District of Pennsylvania Chief Judge Donetta W. Ambrose handed workers a mixed decision in a Pittsburgh-area overtime lawsuit entitled Andrako v. United States Steel Corp., 2009 U.S. Dist. LEXIS 52235 (W.D. Pa. June 22, 2009).  Here is the tally of the district court’s rulings:  (i) the protective items worn by the coke manufacturing plant employees constitute “clothing” under FLSA Section 3(o); (ii) the employees’ post-shift showering is covered by FLSA Section 3(o); (iii) the pre-shift and post-shift walking time is not covered by either FLSA Section 3(o) and does not constitute preliminary or postliminary activities under the the Portal-to-Portal Act; and (iv) the employees were not required to exhaust the union grievance process prior to filing suit because their legal claims stemmed from the FLSA rather than the collective bargaining agreement.  Two of the cases discussed extensivy by Judge Ambrose were handled by WLF.  The first case is In re Cargill Meat Solutions Wage & Hour Litig., where our overtime attorneys represented hundreds of workers from Hazleton, Pennsylvania (Luzerne County), and Wyalusing, Pennsylvania (Bradford County) who sought straight-time overtime pay for their donning, doffing, washing, and travel activities.  The second case is Gatewood v. Koch Foods of Mississippi, where we represent hundreds of Mississippi poultry workers with similar claims.  The Andreko opinion is a must-read for overtime lawyers and attorneys from Pittsburgh and elsewhere.

I recently re-read a terrific DOL Wage and Hour Division Opinion Letter explaining that salaried case managers are not covered by the FLSA’s administratrive exemption to the overtime pay if their activities ”are more related to provifing the Company’s ongoing, day-to-day case management services for its customers, which involve duties such as assessing costs of care, preparing a plan of care, and identifying and services to meet the customers’ needs.”  See Opinion Letter FLSA 2007-7 (Feb 8, 2007).  This is true regardless of whether the case manager has a bachelor’s degree or exercises significant discretion in recommending the type of care and services to be provided to the customer/client.  This opinion letter serves as an important reminder that case managers, case workers, and social workers frequently are misclassified as exempt from the FLSA’s overtime pay mandate.  Indeed, in the last year, WLF has successfully recovered overtime wages for case managers, caseworkers, and social workers throughout Southeastern Pennsylvania, including Bucks County, Montgomery County, and Philadelphia County.

I recently read an interesiting (and, I think, important) decision in which Middle District of Pennsylvania Judge Thomas I. Vanaskie reasoned that a “workweek standard” must be applied in determining whether a company violated the minimum wage provisions of the Pennsylvania Minimum Wage Act (“PMWA”), 43 P.S. sec. 333.101, et seq., by failing to pay workers for all hours worked.  In Masterson v. Federal Express Corp., 2008 U.S. Dist. LEXIS 99622 (M.D. Pa. Dec. 10, 2008), the workers claimed that the copmany did not pay them for all hours worked and they sought the minimum wage of $7.15 for every unpaid hour.  After analyzing the PMWA, Judge Vanaskie held that an employer does not violate the PMWA’s minimum wage provision so long as the employee’s weekly pay divided by all hours worked (including the unpaid hours) exceeds the $7.15 minimum wage.  In applying this method, the court utilized what is known as the “workweek standard” and rejected the view that every hour stands alone under the PMWA’s minimum wage provision.  This case has important implications for “off-the-clock” cases in which the workers do not work in excess of 40 hours per week.  Of course, once the work hours cross the 40-hour threshold, the PMWA’s overtime pay provisions kick in, and the workers’ damages will flow from their “regular rate” of pay.  So Masterson has no bearing on overtime cases.

Employers who lose white collar misclassification cases often try to blunt the worker’s damages by arguing that, under 29 CFR 778.113, the salary must be spread accross all hours worked, leaving the employer to merely pay half-time for the overtime hours.  This argument often is misplaces.  29 CFR 778.113(a)  provides:  “If the employee is employed solely on a weekly basis, his regular hourly rate of pay on which time and a half must be paid, is computed by dividing the salary by the number of hours which the salary is intended to compensate.”  The determination of the “number of hours which the salary is intended to compensate” is a question for the jury.  See Rodriguez v. Farm Stores Grocery, Inc., 2008 U.S. App. LEXIS 4817, *21-26 (11th Cir. Mar. 6, 2008).  Moreover, as with most FLSA provisions, the defendant bears the burden of proof on this issue.  See Giles v. City of New York, 41 F. Supp. 2d 308, 317 (S.D.N.Y. 1999).  Most importantly, the mere fact that employees worked excessive hours without receiving any pay beyond their salary is not dispositive.  As observed by Judge Motley in Giles:  “The fact an employee regularly works 60 or more hours does not, without more, indicate that the employee’s weekly salary was intended to include the FLSA overtime premium for all hours in excess of 40.”  Giles, 41 F. Supp. 2d at 316-17.  The Eleventh Circuit Court of Appeals (as well as other courts) recently agreed:  “In the situation here, where the employee is paid solely on a weekly salary basis, the number of hours the employee’s pay is intended to compensate – not necessarily the number of hours he actually worked – is the divisor.  Rodriguez, 2008 U.S. App. LEXIS 4817, at *22-23.  Similar cases abound, but this posting is not intended to serve as a legal brief.