SCOTUS Rejects Narrow Construction FLSA Overtime Exemption

FLSA Overtime Exemption

The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to covered employees, but provides numerous categories of workers an overtime exemption. On April 2, 2018, the Supreme Court of the United States (SCOTUS) rejected the longstanding principle that these FLSA exemptions must be construed narrowly, holding that service advisors at a California automobile dealership are exempt from the overtime requirements under the FLSA.

Background

As we covered in previous posts about overtime exemptions, at issue in Encino Motorcars, LLC v. Navarro was the “exempt” classification of service advisors at a car dealership. The service advisors premised their argument for overtime on a 2011 Department of Labor rule that expressly excluded service advisors from the definition of “salesman.”  The specific section of the FLSA is section 213(b), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles ….” Service advisors sell, but they sell mechanic service rather than cars, and they are not mechanics themselves. The advisors argued that they fall into a gap in 213(b): they are not “salesm[e]n … primarily engaged in selling … automobiles,” and they are not “partsmen, or mechanic[s] primarily engaged in … servicing automobiles.” In response, the dealer argued that service advisors are plainly “salesm[e]n … primarily engaged in … servicing automobiles ….”

The district court found that the FLSA overtime exemption applied to service advisors. The Ninth Circuit reversed, deferring completely to the 2011 DOL rule.  The Supreme Court rejected this conclusion, holding that the regulation was procedurally defective and courts should not defer to it or rely upon it.  The Supreme Court remanded the case to the Ninth Circuit for reconsideration. The Ninth Circuit again found that service advisors were entitled to overtime because they do not fall within the exemption.

SCOTUS Opinion  FLSA overtime exemption

In its second look at this particular exemption in recent years, the Supreme Court again reversed, basing its conclusion on what it called a “best reading” of the statute’s text. The Court held 5-4 with its opinion reading, “We reject this principle as a useful guidepost for interpreting the FLSA…. Because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a “narrow”) interpretation.’”

Justice Clarence Thomas’ opinion noted that the FLSA contains “over two dozen” exemptions, that the exemptions “are as much a part of the FLSA’s purpose as the overtime-pay requirement,” and that “[w]e have no license to give the exemption[s] anything but a fair reading.” The Court further held that the exemption was not limited to sales employees primarily engaged in selling automobiles and ultimately held that service advisors were exempt because they are “salesm[e]n . . . primarily engaged in . . . servicing automobiles.”

In dissent, Justice Ginsburg, along with Justices Breyer, Sotomayor, and Kagan, sought to emphasize how the majority’s holding was a stark departure from precedent. Underscoring the importance of the Court’s holding regarding the interpretation of FLSA exemptions, Justice Ginsburg wrote that the Court was overruling “half a century” of precedent by rejecting the narrow construction principle.

Conclusion

The Court’s decision is significant as it abandons the longstanding principle that FLSA exemptions are to be construed narrowly in favor of non-exempt status. Generally speaking, courts will now need to place exemptions on the same statutory and interpretive footing as the substantive overtime requirements in the statute. For example, the more common FLSA exemptions, such as the executive, administrative and professional employee exemptions may now be subject to the broader “fair reading” standard in cases that come before the High Court. 

The lawyers at Kingsley & Kingsley will continue to monitor SCOTUS opinions on FLSA exemptions. In the meantime, should you have questions about California’s wage and hour laws, don’t hesitate to contact one of our leading California employment lawyers.

Call and speak to an experienced California lawyer toll-free at (888) 500-8469.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

 

Protections Against Employment Discrimination

Employment Discrimination 

Employment discrimination occurs when an employee or job applicant is treated unfavorably because of his or her race, skin color, national origin, gender, disability, religion, or age. It is illegal to discriminate in any facet of employment, so workplace discrimination extends beyond hiring and firing and encompasses nearly every employment decision, from applications and interviews to assignments and transfers, promotions, pay, and benefits.

In addition to state laws, numerous federal laws make employment discrimination illegal.

  1. Title VII of the Civil Rights Act of 1964 makes it unlawful to discriminate in hiring, discharge, promotion, referral, and other facets of employment, on the basis of race, color, national origin, sex, or religion. This is enforced by the Equal Employment Opportunity Commission (EEOC).
  2. Americans with Disabilities Act (ADA) – The ADA makes it unlawful to discriminate against people with a disability, a record of a disability, or who are regarded as having a disability.
  3. Pregnancy Discrimination Act (PDA) – Employers are required to handle pregnancy in the same way that they would handle a temporary illness or other non-permanent condition that would necessitate special consideration. Pregnancy, childbirth, and related medical conditions must be treated the same as any other medical condition with respect to leave policies, health insurance, job assignments, etc. for both employees and job applicants.
  4. Federal contractors and subcontractors must take affirmative action to guarantee equal employment opportunity without regard to race, religion, gender, or national original when hiring or in the workplace. these factors. Executive Order 11246 is enforced by the Office of Federal Contract Compliance Programs (OFCCP).

Examples of employment discrimination include, but are not limited to: employment discrimination California lawyer

  • Denying select employees from receiving benefits
  • Discriminating when selecting employees for layoffs
  • Using protected classes (e.g. age, race, color) when issuing promotions
  • Paying equally-qualified employees different salaries due to race, age, religion, etc.
  • Excluding potential employees during job advertisements and recruitment
  • Denying certain employees the ability to use company facilities

Speaking with legal counsel is the right action to take if you are in one of these protected classes and feel you have been a victim of discrimination. The links below provide more information about different types of employment discrimination and the ways leading employment lawyers at Kingsley & Kingsley can assist you with your specific situation.

The California lawyers with Kingsley & Kingsley have the experience, ability, and desire to successfully navigate the legal process with you.  For a free initial consultation, don’t hesitate to call our toll free number (888) 500-8469 or click here to contact us regarding your case.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

A Closer Look at Two Forms of Workplace Sexual Harassment

Workplace Sexual Harassment – Defined

According to the EEOC, sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Title VII applies to employers with 15 or more employees, including state and local governments. It also applies to employment agencies, labor organizations, as well as the federal government.

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.

Under Title VII, there are two recognized types of workplace sexual harassment claims:

Quid pro quo sexual harassment is when a person in authority, usually a supervisor, demands that subordinates tolerate sexual harassment as a condition of employment decisions like promotions, assignments, or keeping your job. Unwelcome sexual advances, requests for sexual favors, or other conduct of a sexual nature is quid pro quo sexual harassment when:

  • submission to such sexual conduct is  explicitly or implicitly a term or condition of employment or
  • submission or rejection of the sexual conduct is the basis for employment decisions.

A single instance of harassment is sufficient to sustain a quid pro quo claim (e.g., a superior demands you kiss her/him in order to keep your job), while a pattern of harassment is typically required to qualify as a hostile work environment.

A hostile work environment is created when sexual harassment makes a workplace environment intimidating, hostile, or offensive. Unwelcome sexual advances, requests for sexual favors, and other verbal sexual conduct is hostile environment sexual harassment when:

  • the conduct has the purpose or effect of unreasonably interfering with an employee’s work performance or
  • the conduct creates an intimidating, hostile, or offensive working environment.

Elements which courts analyze in determining whether a hostile environment harassment claim is valid include:

  • Whether the conduct was verbal, physical, or both;
  • Frequency of the conduct;
  • Whether the conduct was hostile or patently offensive;
  • Whether the alleged harasser was a co-worker or supervisor;
  • Whether others joined in perpetrating the harassment; and
  • Whether the harassment was directed at more than one individual or singled out the victim.workplace sexual harassment

Misconceptions of Workplace Sexual Harassment Claims

The EEOC reminds us that sexual harassment can occur in a variety of circumstances, including but not limited to the following:

  • The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
  • The harasser can be the victim’s supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee.
  • The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
  • Unlawful sexual harassment may occur without economic injury to or discharge of the victim.
  • The harasser’s conduct must be unwelcome.

California Employment Lawyers

An attorney can advise you on your alternatives including whether the conduct you experienced in the workplace amounts to sexual harassment. The lawyers with Kingsley & Kingsley located in Los Angeles, California have a wealth of experience fighting for victims of sexual discrimination and harassment. Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or contact us via email here.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

Cal/OSHA Approves Hotel Housekeeping Employee Injury Regulation

Protecting Against Employee Injury

Following years of evaluation, on March 9, 2018, the Cal/OSHA Standards Board approved a standard on “Hotel Housekeeping Musculoskeletal Injury Prevention.” The Office of Administrative Law approved the new regulation that will require hotels and other lodging establishments (i.e. resort, bed and breakfast) to implement new requirements to protect employees who perform housekeeping tasks from any “musculoskeletal injury.”

Background

The mission of the Division of Occupational Safety and Health, better known as Cal/OSHA, is to protect and improve the health and safety of working men and women in California and the safety of passengers riding on elevators, amusement rides, and tramways. Cal/OSHA works to achieve its mission by setting and enforcing standards; providing outreach, education, and assistance; and issuing permits, licenses, and certifications.

To provide proper guidance to California employers, Cal/OSHA included several key definitions in its most recent regulation:

  • Musculoskeletal Injury is defined as “acute injury or cumulative trauma of a muscle, tendon, ligament, bursa, peripheral nerve, joint, bone, spinal disc or blood vessel.”
  • Lodging Establishments is defined as establishments that contain sleeping room accommodations that are rented or otherwise provided to the public, such as hotels, motels, resorts, and bed and breakfast inns.
  • Musculoskeletal Injury Prevention Program, or MIPP, is a written program that addresses hazards specific to housekeeping. The standard specifies that the MIPP may be incorporated into an existing injury and illness prevention program (IIPP) or maintained as a separate program, and must be readily accessible each work shift to employees (including electronic access).

Under the new rules California hotel and other lodging establishments industry employers will be required to update their written Injury and Illness Prevention Plan (IIPP) to incorporate the following:

  1. Must have a Musculoskeletal Injury Prevention Program (MIPP) in addition to the IIPP. The MIPP may be a standalone policy or incorporated into the IIPP.
  2. The MIPP must be “readily accessible” to employees to review during their work shift. An electronic copy is sufficient if there are “no barriers to employee access” as a result. No such requirement exists for IIPPs.
  3. By October 1, 2018, effected employers must complete an initial worksite evaluation to identify and address potential injury risks to housekeepers. This worksite evaluation as well as subsequent evaluations (at least annually) “shall include an effective means of involving housekeepers and their union representative in designing and conducting the worksite evaluation.”
  4. The MIPP’s procedures for investigating musculoskeletal injuries to a housekeeper must allow for input from the housekeeper’s union representative as to whether any measures, procedures, or tools would have prevented the injury.
  5. Records of worksite evaluations and other records required by the MIPP must be made available to a Cal/OSHA inspector within 72 hours of a request. There is no 72-hour deadline under the IIPP regulation.

Important Takeaways for California Employers
The final regulation becomes effective July 1, 2018. However, California hotel and other lodging establishments industry employers now have until October 1, 2018, to roll-out their Musculoskeletal Injury Prevention Programs. These MIPPs must be compliant according to Cal/OSHA inspectors, including the ability to provide records of worksite evaluations and other records required by the MIPP to Cal/OSHA within 72 hours of a request.

employee injury

Questions about California Employment Law

At Kingsley & Kingsley, our attorneys work in a variety of practice areas throughout the state of California, with a central focus on helping the injured or mistreated individual who has suffered abuse at the hands of an employer, insurance company, or corporate entity. Our experienced trial lawyers work to level the playing field and fight for the rights of our clients, regardless of the size and power of the opposition. Should you have questions about California’s labor laws, don’t hesitate to contact leading California employment lawyers at Kingsley & Kingsley.

Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or contact us via email here.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

Labor Department Announces FLSA Self-Audit Program

Self-Audit for FLSA Violations

On March 6, 2018, the U.S. Department of Labor (DOL) announced that it would soon be implementing its Payroll Audit Independent Determination (PAID) program. The PAID program will permit employers to self-report potential Fair Labor Standards Act (FLSA) violations without fear of exposure to liquidated damages. According to the DOL news release, the PAID program seeks to expedite resolution of minimum wage and overtime violations by limiting potential damages to solely the back wages owed. The DOL’s Wage and Hour Division (WHD) intends to employ the PAID program nationwide for 6 months, at which time it will evaluate the effectiveness of the program and its future options.

How the PAID Program Works

To participate in PAID, employers must first review information about PAID and compliance assistance materials on the WHD portion of the DOL website. Employers must then self-audit their pay practices for potential non-compliance. If the employer discovers a non-compliant practice, or believes its pay practices may be compliant but wishes to proactively resolve any potential claims, the employer must take four steps: 1) Identify the specific potential violations, 2) Identify affected employees, 3) Identify the timeframes in which each employee was affected, and 4) Calculate the back wages the employer believes are owed to each affected employee.

Upon receiving such a report from an employer, the DOL will request 1) the calculations conducted during the self-audit, 2) the scope of potential violations to be included in a release, and 3) a variety of certifications regarding due diligence and pay practice adjustments to avoid the same violations in the future. The DOL will assess back wages due and will prepare releases for affected employees, tailored to waive claims only for the identified violations for the time period during which back wages are paid.

Benefits to Employers and Employees

According to the DOL, the program is designed to appeal to both employers and employees. While employee participation in any settlement under the program remains voluntary, employees will receive 100 percent of the back wages paid, without paying litigation expenses, attorneys’ fees and other costs.
Employers may be enticed because the program does not impose penalties or liquidated damages. Employers who participate in the program are expected to correct pay practices going forward; employers who resolve an FLSA violation through the PAID program are ineligible to use the PAID program a second time to resolve the same issue in the future. Also, the PAID program is unavailable for employers currently under DOL investigation or in ongoing litigation concerning the reported FLSA violations.

California Employment Law

flsa violation

 

It will remain to be seen if the pilot program provides employers with an effective method to resolve FLSA wage claims that also avoids the cost of litigation and risk of being required to pay double the wages owed. Further, additional questions remain, to include:

1) Will the DOL’s expedition of outstanding back wage payments to employees nullify the employer’s liability for the same violations?, and

2) Is PAID limited only to the federal FLSA violations or will it ever encompass state wage and hour claims?

The California employment lawyers at Kingsley & Kingsley can answer your questions about state and federal wage and hour laws and we will continue to monitor the DOL’s updates regarding the PAID program. Should you have immediate questions about your rights as an employee, call and speak to an experienced California lawyer toll-free at (888) 500-8469 or click here to contact us via email.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

 

overtime pay

California Supreme Court Clarifies Overtime Pay Rules

Bottom Line for Overtime Pay 

In Alvarado v. Dart Container Corporation of California, the California Supreme Court clarified how a flat sum bonus must be enhanced to comply with overtime premium requirements. “Flat sum” bonuses are bonuses whose amounts do not vary depending on employee productivity, efficiency, or effort and include attendance bonuses, safety bonuses, and the like. In summary, the Court held that when calculating overtime in pay periods in which an employee earns a flat sum bonus, employers must divide the total compensation earned in a pay period by only the non-overtime hours worked by an employee. Failing to comply with the March 5, 2018 ruling concerning overtime pay and lump sum bonuses may expose California employers to costly class actions.

Background | California Overtime Case

Plaintiff Hector Alvarado worked for Defendant Dart Container Corporation of California, a manufacturer of food service products, from September 2010 to January 2012. Alvarado filed a class action complaint against Dart in August 2012 for Dart’s alleged failure to provide overtime and several related derivative claims. The primary dispute was Dart’s calculation of employee overtime with respect to an attendance bonus paid to employees who worked on Saturdays and Sundays. In order to encourage attendance on unpopular work days, Dart paid employees an “attendance bonus” of $15 per day for employees who worked on a Saturday or Sunday and completed their full work shift.

Dart Container relied on a federal regulation and a four-step calculation of the bonus applied to the employee’s regular rate of pay, excluding overtime pay. Alvarado presented a formula that allocated the bonus only to regular hours worked during the relevant pay period. Alvarado would then calculate overtime compensation (1.5 times regular pay), then calculate the bonus’ per hour value (for regular hours), and then multiply that per-hour value times 1.5, and that result by the number of overtime hours worked. Plaintiff’s formula resulted in more pay than defendant’s. The key distinction between the two formulas is whether the bonus is allocated to all hours worked or only to the regular hours worked.

overtime pay

Court Rulings

The trial court granted Dart’s motion for summary judgment, which was affirmed by the Court of Appeal. The Court of Appeal held that because there was no valid California law or regulation explaining how to factor a flat sum bonus into an employee’s regular rate of pay for purposes of calculating overtime, the relevant federal regulation must be followed, and the employer’s method complied with the federal method. The Court of Appeal recognized that the DLSE Enforcement Manual did address the calculation of overtime for a flat sum bonus but held that because the DLSE Manual failed to comply with the Administrative Procedure Act (APA), it is void as underground regulation that is “not entitled to any deference.”

The Supreme Court described the issue before it as needing to determine if the divisor for purposes of calculating a per hour value of a bonus should be: (1) the number of hours the employee actually worked, including overtime; (2) the number of non-overtime hours worked; or 3) the number of non-overtime hours that exist in the pay period. The Court ultimately reversed the Court of Appeal’s decision and found that Dart had used the incorrect calculation in factoring in the attendance bonus. In other words, the Court chose the second option and held that the flat sum bonus at issue should be factored into an employee’s regular rate of pay by dividing the amount of the bonus by the total number of non-overtime hours actually worked during the relevant pay period. Further, the Court’s holding adopted the DLSE’s interpretation, despite finding the DLSE Enforcement Manual was an invalid underground regulation.

Impact

The California Supreme Court’s March 5 ruling (which applies retroactively) establishes a method that results in a much higher overtime rate than the federal method. Given the court’s holding, California employers who pay nonexempt employees flat sum or other similar bonuses should review how they calculate the regular rate for purposes of paying overtime compensation to ensure compliance with the method required by the California Supreme Court. Should you have questions about California’s wage and hour laws, don’t hesitate to contact leading California employment lawyers at Kingsley & Kingsley.

Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or contact us via email here.

Kingsley & Kingsley
16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)