Breaking News: U.S. Supreme Court Finds Pharmaceutical Sales Reps Exempt as Outside Salespersons Under FLSA

This morning the U.S. Supreme Court issued its decision in Christopher et al. v. SmithKline Beecham, finding that SmithKline properly classified its pharmaceutical sales representatives as "outside salespersons" and thus exempt under the wage and hour requirements set forth in the Fair Labor Standards Act.  More ›

Updated: Supreme Court to hear Arguments on Outside Salesperson Exemption

Today, the U.S. Supreme Court will hear oral arguments on whether GlaxoSmithKline PLC's offsite and travelling drug sales representatives are entitled to overtime pay. In the past, these representatives have been deemed "exempt" as outside salespeople and not eligible for overtime. Specifically, the Court is presently considering: More ›

Georgia Court Evaluates Executive Exemption Under FLSA

When is a store manager truly a manager, and not just a lead hourly employee, for purposes of the executive exemption of the Fair Labor Standards Act? Employers recently received some positive guidance from the South Carolina district court in Gooden v. Dolgencorp, Inc., 3:10-cv-1059, Dkt. 60, (U.S.D.C. So. Car. Ap. 3, 2012) and Thomas v. Dolgencorp, Inc., 3:10-cv-1061, Dkt. 59, (U.S.D.C. So. Car. Ap. 3, 2012). More ›

Employer’s Lack of Knowledge of Employee’s Overtime Dooms FLSA Claim

A sewing manager at a Midwestern manufacturing company sued her employer for violations of the Fair Labor Standards Act (FLSA), alleging that the employer failed to pay her overtime. The former manager testified that she regularly arrived to work between 15-45 minutes prior to the official start of her shift and spent that time unlocking doors, turning on lights, turning on the compressor, punching-in, preparing coffee for the rest of the employees, reviewing schedules, gathering and distributing materials to her subordinates’ workstations and cleaning up workstations. Her timecards often reflected that she punched in early. The former manager was aware that her employer had a policy requiring employees to request pre-approval to work overtime, and on one occasion she had even reprimanded one of her subordinates for punching in too early. The former employee admitted that she never complained or made her employer aware that she needed to be paid for arriving early. The district court dismissed the claim finding that the employee’s pre-shift activities were preliminary and de minimis, and that her employer did not know that she was engaging in pre-shift work. The U.S. Court of Appeals for the Seventh Circuit disagreed with the district court’s conclusions about the preliminary and de minimis nature of the work. But it affirmed the dismissal because it agreed that the sales manager did not show that the employer knew, or had reason to know, that she was working before her shift. Although the employee had pointed to her timecards to impute knowledge on behalf of her employer, the court noted that punching in early does not necessarily mean that an employee is working pre-shift. More persuasive was the fact that the employee had weekly meetings with her managers where she failed to disclose the pre-shift work or to complain about improper compensation. Additionally, she was aware of the overtime policy and had enforced it. Employers should note that the mere promulgation of a rule against overtime work is insufficient to justify the nonpayment of overtime if an employer has the opportunity through reasonable diligence to acquire knowledge that an employee worked outside of his or her official work hours.

Kellar v. Summit Seating Inc., No. 11-1221 (7th Cir. Dec. 14, 2011)

Ninth Circuit: Social Workers are not “Learned Professionals” Under FLSA and are Therefore not Exempt From Overtime Requirements

On September 9, 2011, the Ninth Circuit Court of Appeals held that social workers in the state of Washington are not “learned professionals” under the Fair Labor Standards Act and therefore, are not exempt from overtime compensation. More ›

Employee’s Administrative Tasks Performed at home Outside the Coverage of the FLSA

An employee commuting from his home base to various worksites also completed work tasks at home in the mornings and evenings. The company compensated the employee for his home-to-work travel in excess of one hour. Although the company’s policy was for employees to record time spent on at-home tasks, the company expected employees to finish all their work tasks in a 40-hour week. The employee falsified his timesheets, failing to record his overtime work. When the employee was terminated, he sued alleging that the company failed to pay him for his commuting time and overtime work that he failed to report, in violation of the Fair Labor Standards Act (FLSA) and New York Labor Law. A federal trial court found no basis for employer liability and granted summary judgment to the employer. The U.S. Court of Appeals for the Second Circuit rejected the employee’s first argument, finding that his at-home work did not extend his workday under the U.S. Department of Labor’s “continuous workday” rule. Therefore, the court held that the fact that the employee chose to perform his at-home activities immediately before and after his commutes did not mean that the employer was required to pay him for the first hour of those drives, which was “time that was not part of his continuous weekday and that was, in the end, ‘ordinary home to work travel’ outside the coverage of the FLSA.” The U.S. Court of Appeals disagreed with the district court’s finding that the employer was entitled to summary judgment for unpaid overtime work that the employee admittedly failed to report, holding that a jury could reasonably find in the employee’s favor that the employer had actual or constructive knowledge of his off-the-clock work. The court was clear that, “where the employee’s falsifications were carried out at the instruction of the employer or the employer’s agents, the employer cannot be exonerated by the fact that the employee physically entered the erroneous hours into the timesheets.” When dealing with employees who commute, employers must be mindful that tasks deemed “integral and indispensable” to an employee’s principal activities, but which the employee has flexibility in choosing when to perform, do not extend the employee’s workday under the “continuous workday” rule and thus are not compensable. Employers should also be aware that it is unlawful to direct an employee not to record overtime to avoid payment for hours actually worked by him or her.

Vocational Students are not Employees Under the FLSA’s Child Labor Provisions

A boarding school provided its students with “spiritual, academic and vocational training” by placing them in a nursing home where they worked in the kitchen and housekeeping departments and were able to participate in a certified nurse’s aide program. The students typically spent four hours per day in classroom training, and four hours learning practical skills. The students did not receive payment for the duties they performed. The U.S. Secretary of Labor sued the school alleging that the work performed by the students was compensable under the Fair Labor Standards Act (FLSA). The U.S. Court of Appeals for the Sixth Circuit held that the students were the primary beneficiaries of the work they performed because they received valuable vocational training. The court found that the students profited from their work experience, which taught them about responsibility, leadership, and practical work skills. The court further found that the students did not displace compensated workers. Rather, compensated instructors were required to devote their own time to student supervision. Accordingly, the work performed by the students did not violate the FLSA’s child labor provisions. This case illustrates that where students are performing work that is primarily for their own benefit, and the students do not displace compensated workers, they may be considered trainees under the FLSA. However, if a student-worker is performing work that is primarily for the benefit of the employer, he or she must be compensated for all hours worked.

Mexican Restaurant fined $1.2 million for violations of FLSA

A federal court has issued a judgement for $1.2 million for back wages and damages against the owner and the manager of two Mexican restaurants in Decatur, Illinois based on the court's finding of pervasive violations of the FLSA. The U.S. DOL had investigated the pay practices of these restaurants and found innumerable violations of the FLSA with respect to how the wait staff and kitchen staff were paid by the restaurant.

Store Manager Covered by FLSA Exemption Despite Performing Primarily Nonexempt Work

A store manager working 50 to 65 hours per week sued her employer, seeking overtime compensation on behalf of herself and other similarly situated store managers under the Fair Labor Standards Act (FLSA). For FLSA overtime purposes, the employer deemed store managers to be exempt executives. Although the store manager performed significant amounts of nonexempt tasks, the U.S. Court of Appeals for the Fourth Circuit found that she carried out managerial and nonmanagerial tasks concurrently and that her nonexempt functions served the employer’s managerial goals of customer satisfaction and store profitability. Despite the fact that the store manager was performing nonmanagerial tasks 100 percent of the time, the court concluded that ultimately she was the only individual responsible for running and managing the store. Accordingly, the court held that the store manager was exempt from the FLSA’s overtime requirements. Without a viable individual claim, the court further held that the store manager could not proceed with overtime claims on behalf of others whom she alleged were similarly situated. Employers should be aware that a managerial employee may properly be designated as exempt under the FLSA where he or she is given sole responsibility for the management of a facility, even in circumstances where the employee is also performing nonexempt work.
 
Grace v. Family Dollar Stores, Case No. 09-2029, (4th Cir. Mar. 22, 2011)

Supreme Court Holds FLSA Retaliation Provision Protects Oral Complaints

An employee verbally complained to his employer about the location of the employer’s time clock. He contended that the employer unlawfully denied employees compensation for time spent donning protective gear required for the job by placing the time clock away from the dressing area. The employee “raised a concern” with his supervisor and expressed that “it was illegal for the time clocks to be where they were.” He further asserted that he “was thinking about starting a lawsuit about the placement of the time clocks.” The employee was subsequently terminated. The employee sued, arguing that he was terminated in retaliation for “filing a complaint,” in violation of the Fair Labor Standards Act’s (FLSA) anti-retaliation provision. The employer argued that the anti-retaliation provision, which covers employees who have “filed any complaint,” only protects employees who have made a written complaint relating to the FLSA. The U.S. Supreme Court rejected the employer’s argument, holding that the FLSA’s anti-retaliation provision extends to oral complaints, such as those made by the employee. The Court found that the anti-retaliation’s purpose is to prevent “fear of economic retaliation from inducing workers quietly to accept substandard conditions.” That purpose would be inhibited if the FLSA only protected written complaints because some workers may be unable to reduce their complaints to writing. Furthermore, oral methods of receiving complaints, such as hotlines, would be ineffective and the use of informal workplace grievance procedures would be discouraged. Accordingly, the Court construed the “filed any complaint” provision broadly to cover oral as well as written complaints. Employers should note the Supreme Court’s ruling that the FLSA’s anti-retaliation provision affords the same protections as to oral complaints concerning alleged FLSA violations as it does for written complaints, and ensure that employees are not subject to adverse employment actions for making such complaints by either mode of communication.