On January 10, 2024, the U.S. Department of Labor (“DOL”) published its final rule that revises its guidance regarding the standard for assessing whether a worker is an employee or independent contractor under the Fair Labor Standards Act (“FLSA”). The final rule rescinds the DOL’s previous final rule that was published at the end of President Trump’s term of office in January 2021. As we previously reported in the wake of the issuance of the Department of Labor’s October 13, 2022 proposed rule, the final rule returns to a totality-of-the-circumstances analysis akin to the “Economic Reality Test.” This new final rule ultimately has the effect of making it more difficult to classify workers as independent contractors. The new final rule goes into effect on March 11, 2024.Continue Reading The Department of Labor Issues New Final Rule for Independent Contractor Classification

In Harstein v. Hyatt Corp., the Ninth Circuit Court of Appeals held that Hyatt Corporation (“Hyatt”) violated California law, which requires the payment of all wages at separation, when one of its hotels failed to pay employees their accrued vacation pay after furloughing them in the early days of the COVID-19 pandemic.Continue Reading Ninth Circuit Court of Appeals Provides Critical Guidance on Events Triggering Waiting Time Penalties

In March, U.S. Department of Treasury issued its annual General Explanations of the Administration’s Revenue Proposals, commonly known as the “Green Book.”  Among other revenue proposals, the Treasury addressed the treatment of on-demand pay arrangements or earned wage access (EWA) programs, which have risen in popularity in recent years (previously discussed in our Labor and Employment Blog).  EWA programs generally allow employees to access accrued wages before the end of their regular pay cycle.
Continue Reading Treasury Department Proposes Non-Loan Status for Earned Wage Access

In Garcia v. Haralambos Beverage Co., the California Court of Appeal embraced the adage “time kills all deals” to conclude that an employer waived its right to arbitrate the wage-hour claims at issue in the case by, among other things, delaying two years to seek arbitration as a last resort and waiting to locate the plaintiffs’ signed arbitration agreements.  By waiving its right to arbitrate, the employer also lost its ability to strike class claims as a result.
Continue Reading Delaying Enforcement of Arbitration Agreements May Lead to Undesirable Consequences

Enacted in 1963, the Equal Pay Act prohibits differential payments between male and female employees doing equal work except when made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a fourth, catch-all exception for “a differential based on any other factor other than sex.” 29 U.S.C. § 206(d)(1). These exceptions are affirmative defenses which the employer must plead and prove.

In Rizo v. Yovino, 2018 U.S. App. LEXIS 8882, an en banc panel of the Ninth Circuit considered whether an employee’s prior salary was a permissible “factor other than sex” under the Equal Pay Act. Prior Ninth Circuit precedent held that “the Equal Pay Act does not impose a strict prohibition against the use of prior salary.” Kouba v. Allstate Insurance Co., 691 F.2d 873, 878 (9th Cir. 1982). Under Kouba, employers were prohibited from using a factor which “causes a wage differential between male and female employees absent an acceptable business reason.” Id., at 876.

On April 9, 2018, a bare majority of the 11 judge en banc panel of the Ninth Circuit overruled Kouba and held that “a legitimate ‘factor other than sex’ must be job related and that prior salary cannot justify paying one gender less if equal work is performed.” Rizo v. Yovino, 2018 U.S. App. LEXIS 8882, at *15. Writing for the majority, the late Stephen Reinhardt announced a bright-line rule that “prior salary alone or in combination with other factors cannot justify a wage differential.” Id., at *5-6. Five judges concurred in the result, but disagreed with the majority’s holding that prior salary can never suffice to constitute a “factor other than sex” sufficient to justify a wage differential.
Continue Reading Ninth Circuit Holds Prior Salary Cannot Justify Wage Differences