On March 5, 2018, the California Supreme Court issued its decision in the Alvarado v. Dart Container Corporation of California case. The Court’s decision will have far reaching consequences for employers throughout the state by fundamentally changing how overtime is calculated. In short, 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. Continue Reading
On Tuesday, March 6, 2018, the U.S. Department of Labor (“DOL”) announced its launch of the Payroll Audit Independent Determination (PAID) Program (“PAID” or the “Program”) – aimed at increasing employers’ FLSA compliance and timely payment of back wages to employees. The Program, which will start with a six-month pilot period prior to evaluation and finalization, is explained in detail below.
What is the PAID Program’s Goal?
The Program’s goal is to increase compliance with the FLSA’s overtime and minimum wage requirements by providing employers the opportunity to self-audit and report inadvertent non-compliance without fear of litigation or penalties. The Program also hopes to expedite payment of back pay to affected employees and to cut down on litigation costs to employers, employees, and taxpayers.
Who Can Utilize the Program?
Any employer covered by the FLSA can utilize the Program. The FLSA covers essentially all employer/employee relationships.
How Does the Program Work?
Employers who choose to participate in the Program must follow the steps below:
- Review the Program’s compliance assistance materials, soon-to-be available on the DOL’s website, and submit a review certification.
- Self-audit overtime, minimum wage, and classification practices to identify potential non-compliance.
- Report the following to the DOL:
a. Potential violations;
b. Employees affected by each potential violation;
c. Timeframes in which employees were affected; and
d. Calculations of back wages owed to each employee for each potential violation.
- Certify that non-complaint practices will be adjusted to avoid repeated future violations.
The DOL then evaluates the employer-provided information, possibly requesting supplemental information from the employer, and issues a summary of unpaid wages if it finds back wages are owed. At that time, the DOL will also issue Claim Releases to affected employees, which they must sign to receive payment.
Employers must then pay all back wages by the end of the next full pay period and provide the DOL with proof of payment.
Employers who self-report and cooperate with the DOL to remedy violations will receive safe harbor from monetary penalties and additional liquidated damages for such violations.
Important Points to Note About the Program
- Employers cannot use the Program to audit violations for which they have already received complaints from an employee’s representative or counsel or which they are already litigating in court, arbitration, or otherwise. Employers must also certify that they are not litigating or anticipating litigation regarding submitted potential violations
- Employers cannot use the Program to repeatedly audit the same violations. If a violation continues after its audit is completed, the employer can no longer benefit from the Program’s safe harbor.
- Employees are not required to accept Program back wages or sign Claims Releases. They retain their private rights of action against their employer if they choose not to sign Claims Releases.
- Claims Releases are narrowly tailored to the specific violation and time period specified.
- Participation in the Program does not waive the DOL’s right to conduct future investigations on new or repeat violations.
We will continue to monitor the implementation of the PAID Program pilot and provide updates periodically.
More information on the PAID Program is available here.
On March 1, 2018, the Deputy Associate General Counsel for the National Labor Relations Board (“NLRB”) asked the D.C. Circuit to revive its review of the Obama-era Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“BFI”) joint employer test in light of the Board’s February 27, 2018 decision to vacate Hy-Brand Industrial Contractors, Ltd, 365 NLRB No. 156 (December 14, 2017) (“Hy-Brand”).
In BFI, the Board announced a broad definition of “joint employer,” imposing liability and requiring bargaining in situations where a business possesses only potential and indirect control over the employees in question. BFI became arguably one of the most controversial NLRB rulings from the Obama-era Board, drawing severe scrutiny from the employer community.
BFI petitioned for review and the NLRB cross-applied for enforcement of its order. The D.C. Circuit Court of Appeals heard oral arguments in March 2017.
In December 2017, before the D.C. Circuit Court of Appeals reached a decision concerning the petition, the now Republican-majority NLRB issued is decision in Hy-Brand, which overturned the Board’s decision in BFI and restored its “direct control” joint employment standard. The NLRB asked the D.C. Circuit to remand the BFI appeal in light of the Hy-Brand decision, which the Court granted. Continue Reading
Last month, the California Court of Appeal determined in Khan v. Dunn-Edwards Corp., 2018 Cal.App. LEXIS 44 (Cal. App. 2d Dist. Jan. 4, 2018)(certified for publication), that a former employee’s claim under the Private Attorneys General Act (“PAGA”) failed due to insufficient notice to the California Labor and Workforce Development Agency (“LWDA”).
Plaintiff’s Lawsuit & LWDA Letter
Plaintiff sued his former employer, Dunn-Edwards, in a proposed class action claiming that he, and others similarly situated, did not receive their final pay in a timely manner pursuant to Labor Code sections 201-203. After the lawsuit was pending, Plaintiff provided the following notice to Dunn-Edwards and the LWDA: Continue Reading
An employer violated employee’s labor rights by offering her a separation agreement that contained unlawful terms ruled a National Labor Relations Board (“NLRB”) administrative law judge (“ALJ”) in Baylor Univ. Med. Ctr., Case No. 16-CA-195335 (Fort Worth, TX, February 12, 2018) (“Baylor”).
This decision is one of the first ALJ rulings to apply the NLRB’s new standard for addressing the legality of facially neutral work rules applicable to union and non-union workplaces under The Boeing Company, 365 NLRB No. 154 (December 14, 2017) (“Boeing”). In Boeing, the new Republican NLRB majority overruled Lutheran Heritage Village-Livonia, 343 NLRB 646 (“Lutheran Heritage”) and announced a new standard it will follow when it evaluates a work rule that, when reasonably interpreted, could potentially interfere with union and other protected concerted activity under Section 7 of the NLRA (Section 7 conduct). Notwithstanding the new, more pro-business Boeing standard, the ALJ found that Baylor violated federal labor law when it offered a terminated employee $10,000 in exchange for signing a severance agreement and general release that included two unlawful provisions. The severance provisions at issue in the case were: Continue Reading
In December 2017, the California Court of Appeal published a decision confirming obesity is a protected disability in California if it has a physiological cause.
In Cornell v. Berkeley Tennis Club, 18 Cal. App. 5th 908 (2017), Plaintiff was a woman diagnosed as severely obese, weighing over 350 pounds, at five feet five inches tall. Plaintiff began working for Defendant the Berkeley Tennis Club in 1997. Over the course of her employment, Plaintiff worked as a lifeguard, pool manager, and night manager. During her employment, Plaintiff received positive reviews, merit bonuses, and raises. Continue Reading
In recent years, the use of biometrics in business has been growing. In the employment context, for example, some employers use biometric time clocks, which allow employees to “clock in” with a fingerprint or iris scan. Unlike a password or social security number, however, an individual’s biometric identifier or information cannot be changed or replaced if compromised. In the event of a data breach, individuals may have no recourse against identity theft, due to the biologically unique nature of biometrics. Continue Reading
Last month, Governor Bruce Rauner signed Public Act 100-0554 to, among other things, combat sexual harassment in Illinois. Employers should recognize that several of the Act’s mandates go into effect in the New Year. Continue Reading
Many employers rely on pre-dispute arbitration agreements to resolve employment litigation in private arbitration rather than in court. However, two recent bipartisan bills introduced in Congress may change the employment litigation landscape. Continue Reading
Beginning January 1, 2018, the new California minimum wage rate for employers with 26 or more employees will be $11.00 per hour and the new California minimum wage rate for employers with 25 or fewer employees will be $10.50 per hour.
As we previously reported, effective January 1, 2017, the California state minimum wage began increasing yearly through January 1, 2022 for employers employing 26 or more employees. Effective January 1, 2018, the California state minimum wage will begin increasing yearly through January 1, 2023 for employers employing 25 or fewer employees. Continue Reading