Posted on November 21, 2012 by Gibbons P.C.

John C. Romeo and Kelly Ann Bird to Speak at Upcoming NJBIA Employment Seminars

John C. Romeo and Kelly Ann Bird, Directors in the Gibbons Employment & Labor Law Department, will be speaking at upcoming programs that are part of the New Jersey Business & Industry Association's Employment Seminar Series. John C. Romeo, will speak at the event, "HR101: An Employment Law and HR Primer," on the "Review of Key Employment Laws," on Wednesday, November 28, 2012, at Forsgate Country Club. On Friday, November 30, 2012, Kelly Ann Bird will speak at the "How to Comply with State & Federal Family & Disability Leave Laws" program at the Wilshire Grand Hotel.

Mr. Romeo, along with other professionals, will provide practical advice on how to effectively manage employee complaints along with other internal issues including properly identifying exempt vs. non-exempt employees, wage and hour rules, and appropriate hiring and firing procedures. Helpful information and updates on HR topics such as discrimination, leaves of absence, nepotism, and reasonable accommodations will also be discussed during the various panels throughout the day. For more information or to register for the this program, please click here.

Ms. Bird, and other panelists, will help layout a road map for employers who are navigating the complex New Jersey laws governing employee leave. The panel will provide in-depth guidance on how to comply with the numerous overlapping, and sometimes conflicting, federal and state laws.  Relevant cases as well as practical examples to ensure a sound understanding of the current leave laws and laws that may be on the horizon will also be discussed. For more information or to register for this program, please click here.
Tags: , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on June 25, 2012 by Mitchell Boyarsky

U.S. Supreme Court Rules Against OT Pay for Pharmaceutical Salespeople

In a major victory for pharmaceutical companies, the U.S. Supreme Court recently held that company sales representatives who promote their employer’s products to doctors and hospitals are exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). In doing so, the Court resolved a split in the Circuit Courts of Appeal over the scope of the “outside salesman” exemption to the FLSA’s overtime pay requirements. The Court’s holding in Christopher v. SmithKline Beecham Corp. regarding the scope of this exemption has provided much needed clarity to pharmaceutical companies and employers with similar types of sales forces who have relied – and hope to continue to rely – on the exemption.

Whether the FLSA requires pharmaceutical companies to pay their sales representatives overtime under the FLSA has generated significant litigation. As we have previously reported, a number of federal appellate courts have considered whether the FLSA’s “outside salesman” and/or “administrative” exemptions applies to these employees. Until now, the results have been inconsistent, leaving employers with many questions. Indeed, cases from the Second Circuit (covering the states of New York, Connecticut, and Vermont), Third Circuit (covering the states of New Jersey, Pennsylvania, Delaware, U.S. Virgin Islands), and the Ninth Circuit (covering California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) had reached varying conclusions.

Factual Background to the SmithKline Decision

The exemption at issue in SmithKline, the “outside salesman” exemption, applies to those employees “[w]hose primary duty is [ ] making sales.” Under the FLSA, a “sale” includes “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” Because federal law prohibits pharmaceutical manufacturers from directly selling prescription medications to patients, many companies practice what is called “detailing,” whereby their sales representatives, or “detailers,” provide information to physicians about the company’s products with the goal of encouraging them to write prescriptions for these products to their patients. The representatives are legally prohibited from actually consummating sales with the physicians. Consistent with this practice, SmithKline’s sales representatives, including plaintiffs Michael Christopher and Frank Buchanan (the “Reps”), would “call[ ] on physicians in an assigned sales territory to discuss the features, benefits, and risks of an assigned portfolio of [SmithKline’s] prescription drugs.” The primary objective of these visits would be to obtain a non-binding commitment from the physician to prescribe those drugs so “detailed.” In the course of these efforts, the Reps would typically spend approximately 40 hours per week “detailing,” and approximately 10 to 20 hours each week attending events, reviewing product information, returning phone calls, and other miscelleneous tasks.

The FLSA obligates employers to compensate non-exempt employees for hours in excess of 40 per week at the rate of one-and-a-half times the employees’ regular wages. SmithKline did not pay the Reps time-and-a-half wages when they worked in excess of 40 hours per week because it classified them as exempt from overtime. As a result, the Reps brought suit alleging violations of the FLSA for failing to compensate them for overtime.

In a prior similar lawsuit brought in the Second Circuit Court of Appeals, the U.S. Department of Labor (“DOL”) filed an amicus brief in which it advocated against applying the outside sales exemption to the detailers – reasoning that the outside sales exemption does not apply unless a “transfer of title” to the property takes place. The DOL filed a similar amicus brief in the Supreme Court in the SmithKline case.

The Court’s Decision

The Supreme Court held that pharmaceutical sales representatives are covered by the outside salesman exemption and, in so ruling, rejected the position of both the Reps and the DOL that under the FLSA’s regulations a transfer of title is required for a “sale” within the meaning of the exemption. The Court focused on the unique relationship between pharmaceutical sales representatives and the physicians whom they solicit: 

Obtaining a nonbinding commitment from a physician to prescribe one of [SmithKline’s] drugs is the most that [the Reps] were able to do to ensure the eventual disposition of the products that [SmithKline] sells. This kind of arrangement, in the unique regulatory environment within which pharmaceutical companies must operate, comfortably falls within the [regulation’s] catch-all category of “other disposition."

In further support of its decision, the Court noted that the Reps “bear all of the external indicia of salesman.” For example, the Court emphasized that the Reps:

  • were hired for their sales experience;
  • were trained to close each sales call by obtaining the maximum commitment possible from the physician;
  • worked away from the office with minimal supervision; and 
  • were rewarded for their efforts with incentive compensation.

Finally, in considering the equity of fair warning for employers, the Court emphasized that the DOL had previously interpreted the FLSA regulations as requiring only that an employee “in some sense” make a sale, and otherwise “acquiesce[d] in the sales practices of the drug industry for over 70 years.” It would, therefore, be unfair to change the guidance given employers for many years especially when lack of notice would have significant financial repercussions.

Conclusion

The Supreme Court’s decision in SmithKline generally gives employers in the pharmaceutical industry vindication in classifying their sales representatives as exempt from overtime under the FLSA. In this case, the Court looked to job duties and responsibilities of the particular detailers and took into consideration industry practice and regulatory compliance. While there may exist analogous situations outside of the pharmaceutical industry, where the same arguments for application of the outside salesman exemption can be made, employers should conduct an analysis of their own circumstances and not rely unconditionally on SmithKline. Employers should consult with counsel to make these assessments. Attorneys in the Gibbons Employment & Labor Law Department regularly assist employers in these reviews and other employment and labor matters.


Mitchell Boyarsky is a Director in the Gibbons Employment & Labor Law Department. Michael J. Riccobono, an Associate in the Gibbons Employment & Labor Law Department, co-authored this post.
Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on April 4, 2012 by Peter J. Dugan

Third Circuit Opens the Door for "Hybrid" Wage & Hour Claims in New Jersey, Pennsylvania, Delaware, and the U.S. Virgin Islands

On March 27, 2012, the United States Court of Appeals for the Third Circuit issued a precedential decision in Knepper v. Rite Aid Corp. which dramatically alters the landscape for wage and hour litigation for employers operating in the jurisdictions within the Third Circuit, i.e., in New Jersey, Pennsylvania, Delaware, and the U.S. Virgin Islands. Specifically, the Third Circuit ruled that the procedures for litigating a class action alleging state wage and hour violations is not “inherently incompatible” with the procedures for litigating a collective action under the federal Fair Labor Standards Act (“FLSA”). As a result, courts in these jurisdictions may well see a wave of hybrid class/collective actions alleging wage and hour violations under both the FLSA and the corresponding state wage and hour laws in the same complaint.

Background

The Knepper plaintiffs are assistant store managers who had “opted in” to a national FLSA collective action filed against Rite Aid in the Middle District of Pennsylvania. Under the FLSA, courts can assert jurisdiction only over those employees who affirmatively “opt in” to the lawsuit. The lawsuit alleged that Rite Aid misclassified the plaintiffs as exempt from the federal overtime and minimum wage requirements. Subsequently, these individuals filed their own separate class actions in federal courts in Maryland and Ohio under Rule 23 of the Federal Rules of Civil Procedure alleging violations of those states’ wage and hour laws. In a class action certified under Rule 23, the court acquires jurisdiction over all class members, but individual members may elect to “opt out” of the lawsuit. These newly filed lawsuits were ultimately transferred to the Middle District of Pennsylvania. That court dismissed the state law claims because, in its view, the Rule 23 “opt-out” process for litigating class actions under the state-law claims was “inherently incompatible” with the “opt-in” process utilized in FLSA collective actions. Over the years, numerous federal district courts in the Third-Circuit have reasoned that the contrast between an opt-in and opt-out procedure bars federal courts from hearing such dual-filed wage and hour actions.

The Third Circuit Decision

After analyzing the text and legislative history of the FLSA, the Third Circuit found no evidence of Congressional intent to preclude the joinder of “opt out” class action claims under state law with “opt in” FLSA claims. Thus the Third Circuit reversed the district court, stating: “[i]n sum, we disagree with the conclusion that jurisdiction over an opt-out class action based on state-law claims that parallel the FLSA is inherently incompatible with the FLSA’s opt-in procedure.” Moreover, the Court noted that many other circuits, specifically, the Second, Seventh, Ninth, and D.C. circuits have found that such dual filing “does not defeat otherwise available jurisdiction.” In reversing the District Court, the Court of Appeals opened the door for dual-filed and hybrid wage and hour actions in the Third Circuit.

Employer Takeaways

In light of this development, employers with operations in the Third Circuit may be forced to litigate wage and hour claims under both federal and state law as part of the same lawsuit. The differing statutes of limitations, recoverable damages and burdens of proof as between the FLSA and the various state laws will certainly complicate the litigation of these claims, making them more costly for employers to litigate and more difficult to settle and subjecting employers to a wider array of damages.

Given this development, now is a good time for employers with operations in New Jersey, Pennsylvania, Delaware, and Virgin Islands to communicate with experienced wage and hour counsel regarding strategies to avoid wage and hour litigation. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.


Peter J. Dugan is an Associate in the Gibbons Employment & Labor Law Department.
Tags: , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on January 30, 2012 by Peter J. Dugan

New York Wage Theft Prevention Act Notification Deadline is February 1

In January and May 2011, we reported on a series of changes to New York Labor Law contained within the Wage Theft Prevention Act (“WTPA”). These changes are now applicable to all New York private-sector employers (including charter schools, private schools, and not-for-profit corporations). Affected New York employers must provide all employees with written pay notices at the time of hire on or before February 1 in each year.

Given that this deadline is fast approaching for 2012, now is a good time for employers to communicate with experienced wage and hour counsel regarding compliance strategies. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.


Peter J. Dugan is an Associate in the Gibbons Employment & Labor Law Department.

Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on December 5, 2011 by Michael J. Riccobono

Recent Case Law Focuses Heavily on "Outside Salesman" and "Administrative" Exemptions to the Fair Labor Standards Act

Introduction

The issue of whether pharmaceutical company sales representatives who promote their employer’s products to doctors and hospitals are exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”) has spurred litigation across the country. Courts have considered whether these employees are entitled to overtime compensation or are exempt under the “outside salesman” or “administrative” exemptions recognized by the FLSA. The results have been inconsistent, leaving employers with many questions. For example, the Second Circuit (covering the states of New York, Connecticut, Vermont) has held that the pharmaceutical company sales representatives at issue did not qualify for either the “outside salesman” or “administrative” exemptions and were entitled to overtime compensation. Conversely, the Ninth Circuit (covering California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) recently held the pharmaceutical sales representatives were exempt from the FLSA’s overtime requirements under the “outside salesman” exemption, noting that the term “sale” must be ready broadly to include employees who “in some sense” sell. The Ninth Circuit ruled that the Department of Labor regulations, which supported a finding that the “outside salesman” exemption applied to the pharmaceutical representatives, were entitled to substantial deference and disagreed with the Second Circuit’s conclusion to the contrary. Most recently, the Third Circuit (covering New Jersey, Pennsylvania and Delaware) held that a pharmaceutical company’s sales representatives qualified for the “administrative” exemption in large part because they “executed nearly all of [their] duties without direct oversight.” Interestingly, despite the different results, the sales representatives at issue in the cases decided by the Second and Third Circuits performed similar functions.

While there are some factual distinctions between the three cases discussed above, the circuit split has left pharmaceutical companies and companies who employ a similar sales forces without clear guidance as to how they should classify sales representatives for purposes of overtime. Such guidance, however, may be available soon. The United States Supreme Court recently agreed to hear an appeal from the Ninth Circuit case. A decision is expected in the spring of 2012.

In the meantime, companies with a workforce within the states covered by the Third Circuit should take note of a recent opinion from of the Eastern District of Pennsylvania, Ibanez v. Abbott Laboratories, which helps add some clarity to the scope of the “administrative” exemption to the FLSA’s overtime pay requirements.

Ibanez v. Abbott Laboratories

In Ibanez, Plaintiff Gerald Ibanez, a former pharmaceutical representative for Abbott Laboratories, Inc., claimed his employer did not pay him overtime because it misclassified its representatives as exempt from overtime requirements. Ibanez sued Abbott Laboratories under the FLSA and the Pennsylvania Minimum Wage Act of 1968 (“PMWA”), which has an administrative exemption provision that substantially mirrors that of the FLSA. Defendant Abbott Laboratories brought a motion for summary judgment, arguing that, under existing Third Circuit precedent, Ibanez was exempt from the overtime requirements under the administrative exemption.

Before discussing Ibanez’s specific duties as a pharmaceutical representative, the Court analyzed the statutory requirements of the FLSA’s administrative exemption provision. Essentially, this provision exempts from overtime pay those employees whose “primary duty includes the exercise of discretion and independent judgment with respect to matters of significance,” among other requirements.

Relying on two recent decisions within the Third Circuit dealing specifically with the administrative exemption as applied to pharmaceutical sales representatives, the Ibanez Court found that Plaintiff was an exempt employee falling under both the FLSA and PMWA’s administrative exemption provision. Critical to the Court’s conclusion in this regard was a finding that the Plaintiff’s engaged in

“short- and long-term business planning, including (but not limited to):

  • Utilizing available resources to plan and implement strategies to drive business in [Plaintiff’s] territory, including frequent analysis of reports from the home office and the creation of a focused specific business plan;
  • Developing solid plans to allocate and direct resources to keep physicians and drive business;
  • Developing and utilizing key opinion leaders;
  • Developing focus plans to direct resources to physicians that would bring the highest ROI;
  • Participated in the creation of business plans which tracked doctors by market share and potential.”

Granting the Defendant’s motion for summary judgment, the District Court reasoned that “[t]hese activities [ ] are consistent with relevant definitions of exempt administrative work because they affect Defendant’s business operations to a substantial degree, and involve sales and promotional work on behalf of Defendant that reflect the exercise of discretion and independent judgment with respect to matters of significance.”

Conclusion

Until the Supreme Court resolves the question of whether pharmaceutical sales representatives who promote products are subject to any of the exemptions recognized by the FLSA, companies with similar sales representatives should be cautious when classifying such employees as exempt or nonexempt. Please feel free to contact any one of the attorneys in the Gibbons Employment and Labor Law Department should your company have any questions.


Michael J. Riccobono is an Associate in the Gibbons Employment & Labor Law Department.

 
Tags: , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on December 5, 2011 by Suzanne Herrmann Brock

Professionals Who Are Paid On An Hourly Basis May No Longer Be Exempt From Overtime Under New Regulations

As we previously reported on September 6, 2011, the New Jersey Department of Labor and Workforce Development (NJDOL) adopted the so-called "white collar" exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained in the Federal Fair Labor Standards Act ("FLSA"). Employers are not required to pay overtime compensation (i.e. compensation at the rate of 1.5 percent of the employee’s regular hourly rate) to an employee who qualifies for one of these exemptions. The new regulations were intended to provide consistency between federal and New Jersey law. They leave open the possibility, however, that employees who previously qualified for an exemption under New Jersey law may now have to be reclassified as non-exempt. The issue is raised by the New Jersey Appellate Division’s recent decision in Anderson, et al. v. Phoenix Health Care, Inc., et al. 

In Anderson the court affirmed summary judgment for the defendant employers and held that registered nurses, as “professionals,” are not entitled to overtime compensation even if paid on an hourly basis, as opposed to on a salary basis, so long as they are compensated in excess of the weekly minimum salary provided for in the New Jersey Administrative Code. The court endorsed one of the NJDOL’s longstanding interpretations of New Jersey’s Wage and Hour Law. Specifically, employees who meet all the criteria for the professional exemption from the overtime rate, will still qualify for that exemption despite being paid on an hourly basis as opposed to a salary basis. However, in a footnote, the Appellate Division referenced the NJDOL’s newly adopted regulations, and indicated that it was not opining on whether the result it had reached would be the same under the new regulations.

As noted, the new NJDOL regulations adopt the “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained within the Federal Fair Labor Standards Act (“FLSA”). Indeed, the new New Jersey regulations expressly declare that the “provisions of 29 CFR Part 541 are adopted herein by reference.” This presumably includes 29 CFR §§ 541.600(e) and 541.602 (a) . These regulations provide that nurses, as well as other “professionals” that service the medical profession are not exempt from the salary or fee requirement, and must be paid on a salary basis of not less than $455 per week in order to be exempt as professionals.

At this time it is unclear how New Jersey courts will interpret the new regulations with respect to employees who meet the duties test of a professional, but who are paid on an hourly basis, such as the plaintiffs in Anderson. If the Courts follow the FLSA regulations strictly, these individuals will likely no longer qualify for the professional exemption.

The attorneys in the Gibbons Employment & Labor Law Department have been following the recent developments in New Jersey Wage and Hour law closely and would be happy to discuss with you the potential impact that these developments will have on your business. Please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department with any questions that you may have.


Suzanne Herrmann Brock is an Associate in the Gibbons Employment Law Department.

 
Tags: , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on September 20, 2011 by Peter J. Dugan

New Jersey Adopts Federal White-Collar Overtime Exemptions

The New Jersey Department of Labor and Workforce Development (“NJDOL”) has adopted the so-called “white collar” exemptions for Administrative, Executive, Professional, Outside Sales, and Computer employees as contained within the Federal Fair Labor Standards Act (“FLSA”). The adoption of these changes - which are considered by many to be long overdue - was announced in the New Jersey Register on September 6, 2011. The new regulations became effective immediately upon publication. As explained below, these changes will benefit employers and provide clarity and consistency to the wage and hour landscape in New Jersey.

Under both New Jersey and federal law, unless employees are “exempt” from such requirements, employers must pay them the minimum wage and overtime. In August 2004, the U.S. Department of Labor (“U.S. DOL”) broadened the scope of the exemptions under the FLSA for Executive, Administrative, Professional, Outside Sales, and Computer employees. Because of these employer-friendly changes, a larger number of employees have been found to be “exempt” from overtime and minimum wage requirements under federal law. Some of the critical changes to the federal regulations included:

  • Increasing the Salary Basis threshold for Executive, Administrative, and Professional employees to $455 per week (or $26,660 per year) exclusive of board and lodging;
  • Abandoning the antiquated long and short-form tests in favor of a single duties test for each exemption, which focuses on the primary character of an employee’s duties (as opposed to percentage of time spent);
  • Creating a new exemption for certain “highly compensated” employees who earn in excess of $100,000 per year;
  • Clarifying that certain occupations (e.g., public safety and health officers, licensed practical nurses, and paralegals) must be paid overtime in most cases;
  • Specifically identifying dozens of job classifications that generally do or do not qualify as exempt under any of the white-collar exemptions; and
  • Creating a “safe harbor” limiting liability for employers who take improper deductions from an exempt employee’s pay.

Upon the U.S. DOL’s implementation of the new regulations, many states followed suit by amending their corresponding state wage and hour exemptions to mirror the federal exemptions. Until now, New Jersey had not done so. Now, that New Jersey has adopted regulations akin to the federal rules, employers with any part of its workforce in New Jersey should review job classifications as they relate to Administrative, Executive, Professional, Outside Sales, and Computer employees. The newly adopted regulations may create opportunities for New Jersey employers to classify certain previously nonexempt employees as exempt. Employers, however, should still exercise caution when making these determinations.

The attorneys in the Gibbons Employment & Labor Law Department have been following these developments closely and would be happy to discuss with you the potential impact that these new regulations will have on your business. Please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department with any questions that you may have.


Peter J. Dugan is an Associate in the Gibbons Employment & Labor Law Department.
Tags: , , , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on May 4, 2011 by Peter J. Dugan

New York Wage Theft Prevention Act Effective April 9, 2011

We previously reported on a series of changes to New York Labor Law contained within the Wage Theft Prevention Act (“WTPA”) that are now applicable to all New York private-sector employers (including charter schools, private schools, and not-for-profit corporations).

As discussed in our previous post, the WTPA requires New York employers to provide all employees with written pay notices at the time of hire and on or before February 1 of each year that include:

  • The employee’s rate or rates of pay
  • The overtime rate of pay, if the employee is nonexempt
  • The basis of wage payment (e.g., per hour, per shift, per week, piece rate, commission, etc.)
  • The allowances to be claimed against the minimum wage (e.g., tip, meal, and lodging allowances)
  • The regular pay day
  • The employer’s name and any name under which the employer conducts business
  • The physical address of the employer’s main office or principal place of business (if different from the mailing address)
  • The employer’s telephone number

The above disclosures must be given in English as well as the employees native language (if the NYDOL has provided a notice template in the employee’s primary language, with Spanish, Chinese, Korean, Creole, Polish, and Russian versions supposedly being made available soon on the NYDOL's website). Moreover, the WTPA requires that employers get signed acknowledgments from employees that verify the above disclosures.

To assist New York employers with compliance, the NYDOL has issued the following materials:

Based on the information released by the NYDOL, we wanted to bring the following WTPA-related items to your attention:

  • Employers are not required to use the above-linked template forms. Employers can develop their own pay notices so long as they comply with the WTPA. Moreover, the NYDOL has specified that the notice obligations can be included in a letter and/or employment agreement; however, it must be on its own form. In other words, the NYDOL seems to be directing that the notice obligations appear on a separate page or pages from the rest of the agreement, such as in an appendix.
  • The pay notice can be distributed electronically, but there must be a system in place where the employee can acknowledge the receipt of the notice as well as print copies.
  • The NYDOL has specified that: (i) new-hire notices must be provided to employees hired on or after April 9, 2011 before they perform any work; and (ii) annual notices must be provided to all employees between January 1 and February 1 beginning in 2012. The WTPA’s annual notice requirement will not be satisfied if notice is given at any other time.
  • Under the WTPA, employers are required to keep copies of the notices and acknowledgments for six years and must be able to provide them to the NYDOL upon request.
  • If an employee refuses to acknowledge the notice, the NYDOL has instructed employers to still provide the notice and to note the employee’s refusal to sign.

In addition to the above notice requirements, the WTPA requires employers to provide certain information in writing along with each payment of wages. Specifically, the dates of work covered, the employer’s name, address and phone number, the employee’s rates of pay and basis thereof (e.g., hour, shift, day, week, salary, piece, commission, etc.), gross wages, deductions, net wages, and allowances claimed against the minimum wage (e.g., tip, meal, lodging), overtime rates, and the number of regular and overtime hours worked.

The NYDOL has indicated that employers can provide these pay statements electronically if the employee can access the statements on a computer provided by the employer and print a copy for their records. The NYDOL has indicated that it will at some point issue a sample pay statement that demonstrates the necessary entries.

Given that the WTPA became effective last month, now is a good time for employers to communicate with experienced wage and hour counsel regarding compliance strategies. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment Law Department.


Peter J. Dugan is an Associate in the Gibbons Employment Law Department.
Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on January 4, 2011 by Peter J. Dugan

New York Employers Must Comply with Wage Theft Prevention Act Effective April 12, 2011

On December 14, 2010, New York Governor David Patterson signed the Wage Theft Prevention Act (“WTPA”), a new law that significantly changes the wage and hour landscape for all New York employers. This amendment to the New York Labor Law targets those employers who engage in “wage theft” by underpaying employees. In application, however, the WTPA will affect all New York employers by imposing burdensome notification and recordkeeping requirements, expanding the scope of penalties for violations, and increasing opportunities for employment litigation through strengthened anti-retaliation provisions. In compliance with these new amendments, New York employers will need to amend their payroll practices on or before April 12, 2011. Our summary and analysis of the key amendments is set forth below.

Notification Obligations

Under the WTPA, New York employers must now provide all employees with written notifications that contain the following information:

  • The employee’s rate of pay, the basis thereof (e.g., hourly, weekly, salary, commission, etc.), the regular pay date, and allowances claimed against the minimum wage (e.g., tip, meal, or lodging allowances);
  • The employer’s name (including any “doing business as” names), telephone number, and the physical address of the employer’s main office or principal place of business;
  • Nonexempt employees must also be given notice of their regular rate of pay as well as their overtime rate of pay.

Employers must provide this information at the time of hire as well as on or before February 1 in each year thereafter. The above disclosures must be in English as well as the employee’s self-identified primary language. Moreover, employers are required by the WTPA to obtain signed acknowledgments from employees, verifying that the notifications were made. Employers who fail to comply may face legal actions and be subject to monetary damages, injunctive relief, as well as paying reasonable attorneys’ fees and costs.

Pay Statement Obligations

Under the WTPA, New York employers must now provide written statements along with each payment of wages. The statements must include the dates of work covered, the employer’s name, address, phone number, rates of pay and basis thereof (e.g., hour, shift, day, week, salary, piece, commission, etc.), gross wages, deductions, net wages, and allowances claimed against the minimum wage (e.g., tip, meal, or lodging allowances). For nonexempt employees, the statement must also include the regular hourly rates of pay, overtime rates of pay, and the number of regular and overtime hours worked. In addition, upon the request of an employee, the employer must now furnish an explanation in writing as to how specific wages were computed. These compliance obligations extend beyond the recordkeeping requirements imposed on employers under federal law. New York employers who fail to comply with these new obligations may face legal actions and may be subject to monetary damages, injunctive relief, as well as paying reasonable attorneys’ fees and costs.

Recordkeeping Obligations

Under the WTPA, employers are now required to keep wage-related records for 6 years. For each week, employers must maintain contemporaneous, true, and accurate payroll records showing hours worked, rates of pay and basis thereof (e.g., hourly, salary, shift, day, piece, commission, etc.), gross wages, deductions, net wages, and allowances claimed against the minimum wage (e.g., tip, meal, lodging allowances) for each employee. The records for nonexempt employees must also indicate regular hourly rate of pay and overtime rate of pay as well as the total number of regular and overtime hours worked.

Expanded Remedies

The WTPA increases the scope of available remedies for wage and hour violations.

  • Liquidated Damages: Unless they can prove a good faith basis for believing they were in compliance, New York employers who fail to pay wages (e.g., minimum wages, overtime wages) are liable for the total amount of unpaid wages, costs, attorneys’ fees and liquidated damages. Liquidated damages presently are calculated to equal 25% of the total amount of wages due. The WTPA quadruples the amount to equal 100% of the wages due. On its face, this increase appears to mirror the liquidated damages available under the federal Fair Labor Standards Act (“FLSA”). However, employers should be mindful that the statute of limitations for violations of the New York Labor Law is 6 years (currently the longest of any state wage law), whereas the FLSA statute of limitations is at most three years. Additionally, employers must be mindful that at least some courts have found that liquidated damages under the FLSA and the New York Labor Law do not offset one another and may be recovered simultaneously.
  • Workplace Postings: The WTPA empowers the Commissioner of Labor to post a notice (for up to 1 year) in an area visible to employees and which summarizes the employer’s violation. If the violation is willful, the Commissioner may post the notice (for up to 90 days) in an area that is visible to the public.
  • Criminal Penalties: Under the New York Labor Law, employers that fail to pay the minimum wage or overtime compensation may be found guilty of a misdemeanor, and therefore fined up to $20,000 dollars or imprisoned for up to one year. If a second violation and conviction occurs within 6 years, the employer will be guilty of a felony. The WTPA expands these criminal penalties to partnerships and limited liability companies.
  • Attorneys’ Fees: The WTPA eliminates the potential for judicial discretion by directing the courts to award “all” reasonable attorneys’ fees as well a prejudgment interest in cases involving the underpayment of wages.

Anti-Retaliation

The WTPA grants anti-retaliation protection to employees who “reasonably and in good faith believe” that a violation of the Labor Law or Order of the Commissioner has occurred. Accordingly, we foresee this vague standard leading to an uptick in employees alleging retaliation claims. If successful, these employees will entitled to injunctive relief, liquidated damages of up to $10,000, back pay, and reinstatement. The WTPA also provides for an award of front pay in lieu of reinstatement. Unlawful retaliation is now deemed a class B misdemeanor.

Conclusion

In sum, the WTPA changes the way New York employers, large and small, will need to conduct business and keep records. The myriad of wage and hour laws was already complicated and is becoming more so. The cost to employers of non-compliance — regardless of whether from ignorance, misunderstanding, or willfulness — is getting even costlier. Accordingly, now is a good time for employers to communicate with experienced wage and hour counsel regarding compliance strategies.


Peter J. Dugan is an Associate in the Gibbons Employment Law Department.
Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on October 26, 2010 by Kristin D. Sostowski

FLSA Amended to Require Break Time for Nursing Mothers

Among the provisions of the sweeping federal health care legislation enacted earlier this year, the Patient Protection and Affordable Care Act (PPACA) amended Section 7 of the Fair Labor Standards Act to provide a new break-time requirement for nursing mothers who are non-exempt employees. A new fact sheet recently issued by the US Department of Labor's Wage and Hour Division supplies employers with information regarding the requirements of the new law.

The PPACA requires employers to provide nursing mothers who are non-exempt employees with reasonable break time to express breast milk. Employers should be aware of the following specific requirements:

  • The nursing mother amendment to the FLSA applies only to non-exempt employees (i.e., employees who are not exempt from the FLSA's overtime pay requirements).
  • An employer must allow a nursing mother a reasonable amount of break time to express milk for her nursing child for one year after the child’s birth as frequently as she needs to do so.
  • The space made available for nursing mothers to express breast milk must be shielded from view, free from intrusion from co-workers and the public, and functional as a space for expressing breast milk. Notably, a private bathroom is not considered a permissible space for the nursing breaks. If a dedicated space is not utilized, the space must be available when needed by the nursing mother in order to meet the statutory requirement.
  • Employers with fewer than 50 employees are not subject to the break time requirement if compliance with the provision would impose an undue hardship. All employees who work for the employer must be counted for purposes of the 50-employee rule, not only those who work at the location in question.
  • Employers are not required under the FLSA to compensate nursing mothers who take breaks to express milk. However, where an employer already allows employees compensated breaks, an employee who uses that break time to express milk must be compensated in the same way that other employees are compensated for break time. Consistent with the FLSA’s general requirements, an employee must be completely relieved from duty during uncompensated break time.

Employers should be aware that the new FLSA amendments do not preempt state laws that provide greater protections to employees (for example, laws providing compensated break time, break time for exempt employees, or break time beyond one year after the child’s birth). Therefore, employers should also obtain legal advice regarding the relevant state law(s) to determine whether they are subject to stricter requirements.


Kristin D. Sostowski is an Associate in the Gibbons Employment Law Department.
Tags: , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link