Employment Law Alert

Employment Law Alert

News and Updates on Employment Law

Tag Archives: Wage Payment

Supreme Court Decides Time Spent to Undergo Security Screening is Noncompensable

Posted in Wage & Hour
The time warehouse workers spent waiting to undergo and undergoing antitheft security screenings before leaving work is not compensable under the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et. seq., as amended by the Portal-to-Portal Act of 1947, §251 et. seq. (Portal-to-Portal Act), according to the United States Supreme Court, which unanimously decided Integrity Staffing Solutions, Inc. v. Busk on December 9, … Continue Reading

Changes to FLSA Overtime Exemption for Domestic Service Workers are Coming

Posted in Labor, Wage & Hour
Effective January 1, 2015, the Fair Labor Standards Act overtime exemption for “domestic service workers” will change, having significant ramifications for employers of these employees. Until this change, domestic service workers generally have been exempt from overtime compensation, which means they need not be paid at the rate of time and a half for hours worked in excess of 40 per workweek. The U.S. Department of Labor has issued a Fact Sheet to summarize the changes… Continue Reading

Supreme Court Holds that Severance Payments to Employees Terminated Involuntarily are Taxable Wage for FICA Purposes

Posted in Wage & Hour
On March 25, 2014, the Supreme Court of the United States unanimously ruled that severance payments ─ that are not linked to the receipt of state unemployment benefits ─ are taxable wages subject to the Federal Insurance Contributions Act (“FICA”). United States v. Quality Stores, Inc., 572 U.S. ___ (2014). Specifically, the Supreme Court ruled that the severance payments made to employees who were terminated involuntarily fit within the broad definition of “wages” under both FICA § 3121(a) and Internal Revenue Code § 3401(a)… Continue Reading

Intern or Employee? – The Southern District of New York Offers Guidance

Posted in Wage & Hour
An employee by any other name is still an employee, even if that other name is "intern." On June 11, 2013, the District Court for the Southern District of New York granted summary judgment to several former unpaid interns of Fox Searchlight Pictures, holding that they were, in fact, employees entitled to wages under the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL")… Continue Reading

The Supreme Court Addresses Offers of Judgment in the Context of Collective Actions

Posted in Wage & Hour
In Genesis Healthcare Corp. v. Symcyk, the U.S. Supreme Court, by a vote of 5 to 4, rejected an employee's contention that her employer should not have been permitted to thwart her attempt to bring a collective action under the Fair Labor Standards Act ("FLSA") by making an offer of judgment to her under Rule 68 of the Federal Rules of Civil Procedure that included all of the relief to which she would have been entitled in connection with her individual FLSA claim. The Court's April 16, 2013, ruling provides encouragement to employers who may seek to block an FLSA collective action with an offer of judgment--although, as detailed below, the Court's opinion did leave one issue unresolved. The Court's opinion also applies to cases brought under the Age Discrimination in Employment Act ("ADEA") and the Equal Pay Act ("EPA"), as both of those statutes are governed by the collective action procedures of the FLSA rather than by the class action procedures of Rule 23 of the Federal Rules of Civil Procedure… Continue Reading

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

Posted in Wage & Hour
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… Continue Reading

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

Posted in Wage & Hour
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… Continue Reading

Healthcare System and its CEO Held Not Liable by New York District Court for Wage Claims at Single Hospital in the Hospital System

Posted in Wage & Hour
The issue of whether a hospital system (operating over 25 facilities) and its Chief Executive Officer can be held liable for wage claims by workers employed at a single entity within the system was decided by the Eastern District of New York in Wolman v. Catholic Health System of Long Island, Inc. Applying traditional tests to assess "joint employer" liability, the District Court concluded that plaintiffs did not plead the basic elements in the complaint to hold the hospital system and its CEO liable for alleged unpaid wages. The Court reached a similar conclusion regarding several underlying claims -- failure to compensate employees for meal periods and for time spent pre- and post-shift -- based on plaintiffs' inadequate pleadings… Continue Reading

NJ Department of Labor Re-Adopts Inside Sales Exemption

Posted in Wage & Hour
Effective February 21, 2012, the inside salesperson exemption was re-adopted by the New Jersey Department of Labor and Workforce Development (NJDOL) as part of the Administrative Exemption contained in New Jersey's wage and hour laws. When the 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") in September 2011, it eliminated this long-recognized exemption. As we previously reported, the NJDOL later admitted that the elimination of this exemption was inadvertent and proposed regulations to reinstate it… Continue Reading

New York Wage Theft Prevention Act Notification Deadline is February 1

Posted in Wage & Hour
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… Continue Reading

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

Posted in Wage & Hour
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… Continue Reading

NJ Department of Labor Proposes Re-Adoption of Inside Sales Exemption

Posted in Wage & Hour
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"). While the changes to the New Jersey law were designed to provide clarity to the state's wage and hour landscape and consistency between the federal and New Jersey laws, they inadvertently eliminated a long-recognized exemption in New Jersey for commissioned inside salespersons. Because the New Jersey and federal exemptions for such sales personnel are different and were housed in different sections of the law -- New Jersey's treatment of inside salespersons was part of the "Administrative" exemption, whereas the FLSA addresses the issue in an entirely separate section -- New Jersey's replacement of its "Administrative" exemption with that found in the FLSA resulted in the deletion of the inside salesperson exemption. Acknowledging that this was an "unintended consequence," the DOL has issued proposed regulations to reinstate the inside sales exemption to New Jersey law. In the November 21, 2011 New Jersey Register, the DOL proposed that the following language be added to N.J.A.C. 12:56-7.2 as section (c): "'Administrative'" shall also include an employee whose primary duty consists of sales activity and who receives at least 50 percent of his or her total compensation from commissions and a total compensation of not less than $400.00 per week." A public hearing on the re-adoption of this exemption is scheduled for December 13, 2011 and written comments must be submitted by January 20, … Continue Reading

Wage and Hour Guidance: IRS and Department of Labor Focus on Worker Misclassification

Posted in Wage & Hour
Employers should be aware of two recent announcements from the U.S. Department of Labor ("DOL") and the Internal Revenue Service ("IRS") regarding the misclassification of workers as independent contractors or non-employees. First, the DOL on September 19, 2011 signed a memorandum of understanding with the IRS that is designed to improve the DOL's efforts to curtail employee misclassification by employers by sharing information with both the IRS and participating states. Second, the IRS announced on September 21, 2011 the launch of a new program, the Voluntary Classification Settlement Program ("VCSP"), that will enable employers to resolve prior misclassification of employees as independent contractors. The VCSP significantly limits past taxes for misclassified workers if an employer comes forward voluntarily in an attempt to comply with the tax laws… Continue Reading

New Jersey Adopts Federal White-Collar Overtime Exemptions

Posted in Wage & Hour
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… Continue Reading

Wage and Hour Guidance: Individual Liability for Officers and Directors under the FLSA

Posted in Wage & Hour
Corporate directors, officers, and agents need to be aware of the potential personal risks associated with the non-payment of wages to their company's employees. Although the existence of a corporate or other business-entity form generally provides protection from individual liability for corporate actors, one significant exception is for claims brought pursuant to the Fair Labor Standards Act ("FLSA"). A corporate director, officer or agent's own individual assets may be used to satisfy any judgment for unpaid wages in favor of the company's employees. As employers continue to deal with the economic downturn, and more companies are finding themselves struggling to meet payroll, corporate officers, directors, or agents may more frequently find themselves the individually-named targets of an FLSA lawsuit… Continue Reading

New iPhone Application Allows Employees to Track Hours Worked and Wages Owed

Posted in Wage & Hour
On May 9, 2011, the U.S. Department of Labor ("DOL") issued a press release announcing that there is now an application for the iPhone or iPod Touch that employees can use to easily and independently record their hours worked (including overtime and break times) and calculate wages that are owed to the employee. The free application is called "DOL-Timesheet" and is available in both English and Spanish. Although it is premature to assess whether this application will in fact be utilized by the DOL and employees in wage and hour enforcement and litigation, the emergence of the new technology serves to remind employers of the importance of accurate recordkeeping of employee hours worked and training of employees regarding policies on overtime, rest and meal breaks. In addition, to minimize the risk of an enforcement action and/or litigation and associated penalties, employers should encourage employees to come forward if they notice any disparity between the employer's time records and the records the employee maintains independently through the application… Continue Reading

6th Circuit Applies “Primary Benefit” Test to Students in Work-Study Program

Posted in Wage & Hour
The United States Court of Appeals for the Sixth Circuit recently held that the proper test for determining whether persons participating in employer-sponsored training programs qualify as "employees" under the FLSA is an examination into which party derives the primary benefit from the relationship. The Sixth Circuit's decision in Solis v. Laurelbrook provides guidance to any employer using students to perform work as part of a work-study or trainee program who are not monetarily compensated for such work… Continue Reading

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

Posted in Wage & Hour
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, … Continue Reading
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