WAGE AND HOUR
LAW PRIMER
Amber Schubert
Assistant Attorney General
[email protected]
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Fair Labor Standards Act (FLSA)
Federal Law 29 U.S.C. § 201, et seq.
Regulates wages and hours of employees.
Sets a minimum wage requirement ($7.25/hr).
Covers most employers that are engaged in
interstate commerce.
• No limitations on the number of hours an adult
employee may work.
• Requires that most employees must be paid a
minimum rate for all hours worked.
• In addition, nonexempt employees must be paid
overtime pay for all working hours over 40.
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Unique Features of the FLSA
 Two-year statute of limitations, three if plaintiff
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proves willfulness
Anti-retaliation provision
Individual liability of employers
Fee-shifting provision
Does not pre-empt state wage laws (Arkansas
Minimum Wage Act)
Can be brought as hybrid 216(b)/Rule 23 actions
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When Does the FLSA Apply?
 Enterprise Coverage:
Employees who work for certain business or organizations (or
“enterprises”) are covered by the FLSA. These enterprises, which must
have at least two employees are:
(1) those that have an annual dollar volume of sales or business done of
at least $500,000
(2) hospitals, businesses providing medical or nursing care for residents,
schools and preschools, and government agencies.
 Individual Coverage:
Even when there is no enterprise coverage, employees are protected by
the FLSA if their work regularly involved them in interstate commerce.
 State of Arkansas has sovereign immunity.
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Arkansas Minimum Wage Act (AMWA)
State Law A.C.A. § 11-4-201, et seq.
Similar provisions to the FLSA.
Sets a minimum wage requirement ($6.25/hr).
Defines employer to include the State of Arkansas and
any political subdivision of the state. A.C.A. § 11-4-201.
• My rely on interpretations of the U.S. DOL and
precedent under FLSA “except to the extent a different
interpretation is clearly required.”
• Do not have to exhaust administrative remedies.
• As between FLSA and AMWA, the law most favorable
to the employee applies pursuant to “liberal
construction” provision of A.C.A. § 11-4-201.
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AMWA vs. FLSA
 AMWA applies to employers regardless of annual
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dollar volume of sales.
Both allow for comp time for employees of federal
and state government at the rate of 1.5.
Three-year statute of limitations under AMWA
regardless of willfulness.
Both include fee-shifting provision.
Both statutes provide for liquidated damages up to
the amount of the back wages owed.
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Record-Keeping Requirements
 FLSA record-keeping requirements (29 CFR 516) include:
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Name, address, date of birth, sex, and social security number
Hours worked each day and total hours worked each week
Hourly pay rate and basis on which wages are paid (e.g., per hr/wk)
Total daily/weekly straight-time earnings and total weekly OT earnings
 Must maintain records for three years under both FLSA and
AMWA
 No private cause of action for violation of record-keeping
provisions; however, failure to keep accurate records shifts
the burden of proof. See Anderson v. Mt. Clemens Pottery, 328
U.S. 680 (1946)
 Burden-shifting often a factor in misclassification cases
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Recent Trends
Facts & Figures
• Between 2001 and 2011—500% increase in FLSA
collective actions in federal court.
• 90% of all federal and state court employment law class
actions are Wage & Hour class or collective actions.
• Top 10 reported Wage & Hour cases settled at the
average award of $34 million.
• DOL has increased the budget for the Wage and Hour
Division (WHD), charged with investigating FLSA
violations.
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Why the dramatic increase?
• It has become its own industry for
wage & hour attorneys:
• Firms or lawyers target specific industry
or wage & hour practice.
• Many mirror complaints follow in their
wake.
• Attorneys are using email, social media,
social networking sites, and their own
webpage's to find plaintiffs.
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What is a collective action?
• 29 U.S.C. § 216(b) provides a mechanism similar to Rule 23
• “Similarly Situated” – employees must be similarly situated
to bring a collective action.
• Rule 23 Class Action – Opt Out
• Employees are presumed to be a part of the class
unless they affirmatively opt out of the action.
• Section 216(b) Collective Action – Opt In
• Employees must affirmatively opt-into collective actions.
Those who do not can still pursue their own private
action.
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Litigated Issues
Target Areas
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Typical FLSA Plaintiffs
• Hourly “non-exempt” employees: employees classified by their
employer as non-exempt from FLSA overtime provisions, who
allege they have worked more hours than they have been paid for.
• Salaried “exempt” employees: employees classified by their
employer as meeting the requirements of one or more of the
FLSA exemptions and therefore not entitled to overtime who
allege they should be classified as non-exempt and entitled to
overtime.
• Independent Contractors: individuals classified by an employer
not as employees entitled to FLSA protections but as independent
contractors in business for themselves who allege they should be
classified as employees and entitled to FLSA protections.
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Off-the-clock Work
• Generally: when employees perform work on premises, but
are not “clocked in.”
• Examples:
• Preliminary/Postliminary activities – time spent before
& after your “principal” work activities is generally not
compensable (e.g. traveling to and from work)
• Travel and Training – sometimes compensable
• Meal Breaks – interrupted meal breaks
• Donning and Doffing – pre- and post-shift activities that
are integral and dispensable to the job
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Common Problems
• Interrupted Meal Breaks: Employees being forced or
expected to work during unpaid meal times. In 2012,
companies settled cases for $460,000 to $35 million.
• Lopez v. Tyson Foods, Inc., 690 F.3d 869 (8th Cir. 2012):
Court rejected the “completely-relieved-from-duty” standard in favor of the
“predominantly-for-the-benefit-of-the-employer standard.
• Auto-Meal Deductions: claims that meal breaks were
automatically deducted from employees’ pay even when an
employee worked through all or part of the meal break.
• Quickley v. Univ. of Maryland Medical System Corp., 2012 WL 4069757:
Court held the employer’s auto-deduct policy shifts the burden onto the
employee to record and report time worked during meal breaks. Employers must
create a reasonable process for employees to report and/or reclaim time worked.
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Common Problems, cont.
•Rounding: FLSA allows employers to record employees’ hours
worked as rounded to the nearest 5 minutes, the nearest onetenth, or quarter of an hour. However, the employer must round
in a way that is facially neutral and does not favor the employer.
Example 1:
Q: A bank docks employees by a full quarter hour when they start work more
than 7 minutes after the start of their scheduled shift. Is this lawful?
A: Yes. If that practice is accompanied by rounding up if the employee starts
their shift 8-14 minutes before their scheduled shift, or stays 8-14 minutes after
the end of their scheduled shift.
Example 2:
Q: An employee works 40 hours a week at $10 an hour ($400 a week). She
always clocks out 12 minutes after her shift. Is this lawful?
A: No. The employee worked one hour each week of overtime (12 minutes x 5
days a week). This results in 41 hours – one being overtime.
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Common Problems, cont.
•“Donning & Doffing”: Pre-shift and post-shift activities that are
integral and indispensable to the job. Many common activities
are included: putting on protective gear, logging into computer
networks, booting up computers and software.
•Perez v. Mountaire Farms, Inc., 650 F.3d 350 (2011):
Court held that employees’ acts of donning and doffing protective gear at the
beginning & end of their shifts were “integral and dispensable” to Mountaire’s
chicken processing and primarily for Mountaire’s benefit.
•Sandifer v. U.S. Steel, No. 12-417 (U.S. Jan. 27, 2014):
Court held that within the context of the FLSA Section 203(o) “clothes” refers to
items that are necessary for job performance, that the safety gear in question fell
within the parameters of “clothes” and therefore was subject to the collective
bargaining agreement.
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Law Enforcement and Fire Protection
 FLSA provides an OT exemption to Law Enforcement and
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Fire Protection employees of a public agency with less than
five employees. 29 U.S.C. § 213(b).
LE and FP employees may be paid overtime on a “work
period” basis, with the work period being from 7 to 28
consecutive days. 29 U.S.C. § 207(k).
If paid on a work period basis, LE employees are owed
overtime for hours worked over 171 in a 28-day period.
If paid on a work period basis, FP employees are owed
overtime for hours worked over 212 in a 28-day period.
AMWA specifically incorporates these provisions. A.C.A.
11-4-211(e).
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Misclassification
Exempt or Non-Exempt
 Misclassification claims continue to be the number
one problem for employers.
 Courts and administrative agencies construe exempt
employee classifications very narrowly.
 Employers would be well served to conduct a
vulnerability audit of all exempt positions to ensure
strict compliance with the FLSA and state laws
(proactive action).
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Overview
 Employee must be paid overtime UNLESS he/she
qualifies for an exemption.
 Exempt status is determined by the duties actually
performed not by the title of his or her job.
 Burden is on employer to establish the exemption.
 Five general categories of exempt jobs:
Executive
 Administrative
 Professional
 Computer Professional
 Outside Sales
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Executive Exemption
 Salary:
 $455 per week
 Duties:
 Primary duty is the management of the enterprise or a
recognized department or subdivision.
 Customarily and regularly directs the work of two or more
other employees. (FTEs)
 Has authority to hire or fire other employees (or effectively
makes recommendations as to hiring, firing, promotion or
other change of status of other employees).
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Examples of Executive Employee Duties
 Interviewing, selecting and training of employees
 Setting and adjusting rates of pay and hours worked
 Planning and apportioning work for employees
 Handling employee complaints and grievances
 Planning and controlling the budget
 Disciplining employees
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Administrative Exemption
 Salary:
 $455 per week
 Duties:
 Primary duty is performing office or non-manual work directly
related to the management or general business operations of
the employer or the employer’s customers.
 Primary duty includes the exercise of discretion and
independent judgment with respect to matters of significance.
 This exemption applies to employees in top level management
positions who do not necessarily supervise other employees, but
perform functions the owner/president would otherwise perform.
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Examples of Administrative Employees
Those who generally meet the requirements for
the Administrative Exemption:
 Human
resource managers who formulate, interpret or
implement employment policies
 Management Analysts who study the operations of a
business and propose changes in the organization.
Those who generally do not meet the
requirements for the Administrative Exemption
 Personnel
clerks who “screen” applications to obtain
data regarding applicants minimum qualifications and
fitness for employment.
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Three Categories of Professional Employees
Under the FLSA
 Employees in a field of science/learning, including
lawyers, doctors, nurses, CPAs, architects,
engineers, etc.
 Employees performing work that is original and
creative in character, such as artists, musicians,
designers, etc.
 Teachers in a school system.
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The Learned Professional Exemption
 Salary:
 $455 per week
 Duties:
 Primary duty of performing work requiring knowledge of an
advanced type in a field of science or learning customarily
acquired by a prolonged course of specialized intellectual
instruction.
 The employee must perform work requiring advanced knowledge;
 The advanced knowledge must be in a field of science or learning; and
 The advanced knowledge must be customarily acquired by a prolonged
course of specialized intellectual instruction.
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Computer Professional Exemptions
 Salary of $455 per week or $27.63 per hour
 Primary duty of:
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(a) application of systems analysis techniques and procedures, including
consulting with users, to determine hardware, software or system functional
applications; or
(b) design, development, documentation, analysis, creation, testing, or
modification of computer systems or programs, including prototypes, based
on and related to user or system design specifications; or
(c) design, documentation, testing, creation or modification of computer
programs related to machine operating systems; or
a combination of duties described in (a), (b), and (c), the above, the
performance of which requires the same level of skills. Employed as a
computer systems analyst, computer programmer, software engineer, or
other similarly skilled worker in the computer field.
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IC Misclassification
• Properly classifying an individual as an employee or
independent contractor (IC) can be one of the most
difficult employer tasks.
• Although an IC is thought to be “in business for
him or herself,” in reality, distinguishing
between an employee and an IC
can be hard.
• Many employers intentionally
skirt the FLSA’s employee benefits
requirements, including medical leave
and unemployment insurance.
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IC Misclassification
• Determining whether someone is an independent contractor
includes the following factors:
• The degree of control exercised in performing the work
• The worker’s opportunity for profit or loss
• The worker’s investment in materials and/or equipment
necessary in performing the work
• The level of skill necessary to perform the work
• The permanency of the relationship between the worker and
the alleged employer
• Whether the worker is an integral part of the business
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Misclassification
• In the last two years, the WHD has secured more than
18 million dollars in back wages primarily for FLSA
misclassification violations.
• In The News:
• US Labor Department signs agreements with the
NY Labor Department and NY Attorney General’s
Office to reduce misclassification of employees by
preventing misclassification as independent
contractors or other nonemployee statuses.
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FLSA, 29 U.S.C. 216(b)
Who?
 An action to recover . . . may be maintained against any employer in
any Federal or State court of competent jurisdiction by any one or more
employees for and in behalf of himself or themselves and other
employees similarly situated.
How?
 No employee shall be a party plaintiff to any such action unless he
gives his consent in writing to become such a party and such consent is
filed in the court in which such action is brought.
What?
 The court in such action shall, in addition to any judgment awarded to
the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by
the defendant, and costs of the action.
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Collective Action Certification
TWO-STEP PROCESS:
• Courts in the Eighth Circuit have adopted a two-step approach to certifying 216(b)
collective actions. Under the two-step approach, a court conditionally orders the
class to proceed collectively and permits motions to decertify at the conclusion of
discovery. See McQuay v. Am. Int’l Group, 2002 U.S. Dist. LEXIS 22307 (E.D.
Ark. Oct. 25, 2002).
First Step:
• Referred to as “notice stage”, typically occurs early in the case. Because the
court has minimal evidence at this stage (usually pleadings and affidavits) a
fairly lenient standard applies and typically results in “conditional certification,”
allowing the case to proceed as a representative action throughout discovery.
Second Step:
• Typically precipitated by a motion for “decertification” filed by the defendant.
Most courts agree that the burden of proof at this stage is on plaintiff. But see
Helmert v. Butterball, LLC, 2009 U.S. Dist LEXIS 116460 (E.D. Ark. Dec. 15,
2009) (holding burden at second stage is on defendant).
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Collective Action Certification, cont.
FACTORS RELEVANT AT NOTICE STAGE:
• Whether the plaintiffs held the same job title
• Whether they worked in the same geographic location
• Whether the alleged violations occurred during the same period
• Whether they were subject to the same policies and practices
• The extent to which the acts constituting the alleged violations
were similar
*E.D. Ark – some courts require a showing that similarly situated individuals are
interested in opting in. See Collins v. Barney’s Barn, Inc., No. 4:12-cv-00685 (E.D. Ark.
Oct. 10, 2013)
FACTORS NOT RELEVANT AT NOTICE STAGE:
• Merits of the case
• Court refrains from making credibility determinations or
resolving factual disputes
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Decertification
GENERAL:
• Stricter standard applies now that discovery is complete
• Relevant inquiry is still “similarly situated” – class members do
not have to be “identical”
• The “essential question” is whether the differences outweigh the
similarities. See Douglas v. First Student, Inc., 888 F.Supp.2d 929 (E.D.
Ark. 2012).
FACTORS AT DECERTIFICATION STAGE:
• The employment and factual settings of the plaintiffs
• The various defenses available to the defendants
• Considerations of fairness, procedure, and manageability
• Merits are NOT relevant
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Questions?
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