Labor Employment Law Blog

By Sean Kirby and Rachel Tischler* 

On February 22, 2013, U.S. District Judge Brian Cogan reversed his prior decision that required a plaintiff to seek court approval of a settlement before her action under the Fair Labor Standards Act (“FLSA”) could be voluntarily dismissed. In Picerni v. Bilingual SEIT & Preschool, Inc., No. 12 Civ. 4938 (BMC) (E.D.N.Y. Feb. 22, 2013), plaintiff Donna Piscerni sued her employer, defendant Bilingual SEIT & Preschool, Inc., alleging that she was not paid the requisite minimum wage for her work. In October 2012, the defendant made an offer of judgment and the plaintiff accepted the offer. The offer was accepted prior to the initial case management conference with the court, and prior to the defendant filing its answer or appearance. In considering the offer of judgment, Judge Cogan initially declined to enter judgment, citing 29 U.S.C. § 216(c), which gives the Secretary of Labor the right of approval over stipulated settlements in FLSA cases. In light of Judge Cogan’s initial ruling, the plaintiff filed a motion for approval.

By Eric Raphan and Jonathan Sokolowski 

In Lundy v. Catholic Health System of Long Island Inc., No. 12-1453 (2d Cir. Mar. 1, 2013), the Second Circuit Court of Appeals, resolving what had previously been an unsettled issue in the Circuit, held that the Fair Labor Standards Act (“FLSA”) does not permit a cause of action for “gap-time,” even when an employee has worked overtime, provided that the employee is paid at least minimum wage. A gap-time claim seeks compensation for unpaid work below the 40-hour overtime threshold. For example, if an employee alleges that he or she was not paid for hours 35 to 40 in a given week, the employee has asserted a “gap time” claim for those five unpaid hours. Separately, the court also discussed the pleading requirements necessary to state a claim for failure to pay overtime under the FLSA.

By Eric Raphan, Rebecca Hirschklau and Rachel Tischler*

In February, two New York Federal District Court decisions joined other recent federal cases in enforcing arbitration agreements that preclude employees from bringing their Fair Labor Standards Act (“FLSA”) claims on a collective basis and required the employees to individually pursue their claims in arbitration. See Torres v. United Healthcare Servs., Inc., No. 12 Civ. 923 (DRH)(ARL) (E.D.N.Y. Feb. 1, 2013); Ryan v. JPMorgan Chase & Co., No. 12 CV 4844 (VB) (S.D.N.Y. Feb. 22, 2013). Both of these decisions are discussed below.

By Thomas Kaufman

On February 4, 2013 in Espenscheid v. DirectSat USA, LLC a Seventh Circuit panel unanimously affirmed a Wisconsin District Court judge's decision to decertify a large off-the-clock overtime class action. Judge Richard Posner wrote the opinion affirming the decertification and, in his inimitable style, he provides an easy-to-read dissertation on the limits of the class action device, proper standards for class certification, and the requirement for the plaintiff to propose a manageable trial plan if he wants to avoid having his class decertified. As discussed below, this case is chock full of notable points.

By Thomas Kaufman and Jason Guyser

On January 28, 2013, Hon. George King of the United States District Court for the Central District of California issued an order in Pedroza v. PetSmart, Inc. denying class certification of exempt misclassification claims brought by a former PetSmart store manager. The opinion is interesting in that it contains a detailed examination of certification requirements pursuant to Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011). The analysis Judge King employed would lead to denial of certification in many exemption cases. However, Judge King separately ruled that the case could proceed as an uncertified PAGA collective action, leaving open the possibility that PAGA penalties could somehow be determined notwithstanding the Court’s finding that common issues predominated on the underlying exemption issue.

By Thomas Kaufman (follow me on Twitter)

On June 18, 2012, the U.S. Supreme Court issued a 5-4 decision Christopher v. SmithKline Beecham, holding that pharmaceutical sales representatives ("pharma reps") generally meet the FLSA's outside sales exemption. While there are differences between California and the FLSA concerning the elements of the outside sales exemption, this case dealt with the definition of "selling" under the exemption, which is an area where the two statutes have generally been interpreted as parallel. Accordingly, if Christopher is adopted in California, then pharma reps will qualify as outside salespersons under California law as well. The case is helpful to employers both with respect to the outside sales exemption and with efforts to combat the Obama Administration Department of Labor ("DOL") when it intervenes in wage and hour cases on behalf of the employees.

By Thomas Kaufman and Travis Anderson

On December 13, 2011, the Ninth Circuit issued its most recent decision in the Sullivan v. Oracle saga. See Sullivan, D.C. No. CV-05-00392-AHS (9th Cir. Dec. 13, 2011). The decision followed the June 30, 2011 opinion of the California Supreme Court, in which the Court answered a question that the Ninth Circuit had posed to it: whether employees of a California-based employer who worked entirely outside California could sue the employer under the California Unfair Competition Law ("UCL") for the employer's alleged failure to pay overtime to non-California employees as required under the federal Fair Labor Standards Act ("FLSA"). See Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011). Upon remand of the case from the California Supreme Court, the Ninth Circuit held that the state court's opinion was "conclusive" and justified granting summary judgment to Oracle on the UCL claims of these non-California employees. Separately, the Ninth Circuit held that California overtime law applies to non-residents who perform work within the state, another question that it posed to the California Supreme Court to answer. This blog entry, however, focuses solely on the discussion of out-of-state employees' use of the UCL to vindicate FLSA rights.

The U.S. Department of Labor (“DOL”) is cracking down on unpaid internships, finding that few “for-profit” employers can offer such internships without violating the Fair Labor Standards Act (“FLSA”).

In case of first impression for it, the Ninth Circuit clarified the validity of tip pools under the Fair Labor Standards Act ("FLSA") where the tip pool includes employees who are not customarily and regularly tipped. In Cumbie v. Woody Woo, Inc., the Court of Appeals held that where workers make more than the minimum wage and the employer takes no tip credit, tip pools including non-tipped employees do not violate the FLSA.

Sheppard Mullin partner Douglas Hart achieved a major victory for employers everywhere when the U.S. Court of Appeal for the Ninth Circuit issued its long-awaited decision in the class action lawsuit entitled Parth v. Pomona Valley Hospital Medical Center on October 22, 2009. The Ninth Circuit ruled as a matter of first impression that it is permissible for an employer to reduce pay rates to achieve cost neutrality under the Fair Labor Standards Act ("FLSA") in conjunction with the implementation of a 12-hour shift program. This decision, issued in one of the most significant wage and hour cases to reach the U.S. Court of Appeal in years, is likely to be widely cited in other cases against California hospitals and should greatly benefit the entire health care industry.

The Ninth Circuit Court of Appeals held on July 27, 2009 in Boucher v. Shaw that individual managers of a bankrupt corporation can be held liable to the corporation's former employees for unpaid wages under the federal Fair Labor Standards Act ("FLSA").

Beginning on Friday, July 24, 2009, employees who are covered by the Fair Labor Standards Act must be paid a minimum of $7.25 per hour. This increase is the last of the three increases to the Federal minimum wage provided by the Fair Minimum Wage Act of 2007. The Department of Labor has announced that a new poster reflecting this increase will be available on its website.