Delaware Employment Law Blog

Employers in Delaware and beyond have at least a small obsession with the Fair Labor Standard Act (FLSA). And rightly so, given the current litigation climate. The posts in the employment and human resources blogospheres reflect the interest in everything related to compensable time.  There were so many great posts over the weekend, in fact, that it's safe to say we'll never get around to devoting an entire post to each one.  Instead, here are the Top 5 issues we think are most important for employers to have on their radars.

Compensatory Time

The Employers' Law Blog and the Washington Labor & Employment Wire both have posts on the new comp-time bill proposed in the House last week.  The Employers' Law Blog has a short post alerting employers of a proposed amendment to the Fair Labor Standards Act (FLSA).  The Family-Friendly Workplace Act was introduced on May 14, 2008.  The Act would permit private employers to "pay" employees in compensatory time for overtime hours worked.  Traditionally this option has been available primarily to public sector employees.  The post, Comp Time in the Private Sector?, is a quick read to ensure your up to speed on the current state of law as well as the potential changes.  The Washington L&E Wire's post offers more comprehensive coverage for those who want the full scoop.

Interns

It's that time of year.  High-school students are looking for summer work.  College students are looking for internships. Ah, interns.  Students seek experience and hands-on-training.  Employers seek enthusiastic, eager, and inexpensive additions to the workforce.  Over the past two or three weeks, I've received several questions about intern compensation and this comprehensive article covers the whole spectrum of issues. The article, How to Protect Yourself From the Hidden Dangers of Unpaid Internships, posted on the Labor and Employment Law Blog, is  a good post for those who want a bit more detail.

The (Non-)Compensable Commute

Another hot topic this week was the decision from the Second Circuit, Singh v. City of New York, which addressed whether carrying documents to and from work was compensable commuting time.  Thankfully, the answer is "No."  Some of the blogs to discuss this important decision include, The California Wage Law Blog, Wait a Second!, the 2d Circuit Civil Rights Blog, The Connecticut Employment Law Blog, and the New York Public Personnel Blog.

Administrative Exemption to Overtime

The U.S. Department of Labor (DOL) issued a new Administrator-signed opinion letter that addresses the administrative exemption.  The letter is discussed at The Laconic Law Blog and back at The Washington Labor & Employment Wire.

FLSA Blog

Although technically, this isn't an FLSA topic, it's still worthy of the Top 5.  This blog regularly posts on current FLSA issues so it's almost guaranteed that a Top 5 topic will show up sooner or later at the Fair Labor Standards Act Blog.

And Don't Forget . . .

Of course, I can't leave our own Scott A. Holt off the list. Scott blogged on two really interesting FLSA issues this week, "Keeping Your Employees In the Loop Via Blackberry May Lead to Overtime Litigation," and "Overtime Lawyer Champion of the Middle-Class Worker."

Employees' Blackberry usage may prompt lawsuits. Claims for unpaid overtime wages have swept the country and put the nation's biggest employers on high alert as the class-action craze shows no signs of slowing.

The rapid growth of the PDA and Blackberry usage among employees may hit employers in the pocket book more than they think. These devices used to be just for lawyers, doctors, and executives. But, in today's techno climate, even rank-and-file employees are using PDAs.

A great deal of this usage occurs after hours and on weekends. Is the time spent by an employee when checking and responding to e-mails and messages is compensable under the Fair Labor Standards Act (FLSA) and state wage laws.

The general rule is that non-exempt employees must be paid for all hours worked. The standard used to determine whether time is actually "hours worked" is whether the employee is "suffered or permitted to work." An non-exempt employee who receives a company-provided PDA and uses it to respond or send work-related e-mails my have an argument that he or she should be paid for that time.

While some employers may balk at the notion of paying an employee for time responding to a few e-mails after hours, all of the time spent texting away may add up. Generally, an employee can claim up to two, and in many cases three, years of back overtime or wages. In addition, the FLSA provides a fairly easy mechanism to bring a class action lawsuit for overtime on behalf of similarly situated employees.

So far, there have been no wage-and-hour suits involving PDAs, but employers would be wise to review their policies regarding use of PDAs by non-exempt personnel. In particular, non-exempt employees should be instructed to report any work time spent using PDAs. And employers may even want to place limitations on when PDAs can be used after hours.

The Wall Street Journal Law Blog has a great post on this topic, "Are Blackberrys the Next Battleground in Wage-and-Hour Litigation"

Overtime lawsuits are the hottest employment lawsuit trend.  Nevada lawyer Mark R. Thierman is a demigod in this corner of the legal world.  Thierman has won hundreds of millions of dollars from companies in unpaid wages.   Beginning in the mid-1990's, Thierman filed the first in a series of lawsuits against California employer after having spent most of his career as a management-side employment attorney. 

The federal Fair Labor Standards Act (FLSA) requires the payment of overtime and minimum wage for most workers. About 115 million employees—86% of the workforce—are covered by federal overtime rules, according to the U.S. Department of Labor (DOL). Plenty of wage and hour lawsuits are filed on behalf of the traditional working class, be they truckers, construction laborers, poultry processors, or restaurant workers. In fact, some would say that wage and hour suits have generated a cottage industry for plaintiffs' lawyers.  But no one has been more successful than Thierman in collecting overtime for employees who are far from the factory floor or fast-food kitchen.

His biggest settlements over the last two years have been on behalf of stockbrokers, many of whom earn well into the six figures. Thierman has teamed up with other lawyers to extract settlements totaling about a half-billion dollars from brokerage firms, including $98 million from Citigroup's Smith Barney and $87 million from UBS Financial Services Inc. (As is typical in settlements, the companies do not admit liability.) With those cases drawing to a close, he and other attorneys already are pursuing new claims on behalf of computer workers, pharmaceutical sales reps, and accounting firm staff.

BusinessWeek.com has a great article titled, "Wage Wars," detailing Thierman's Robin-Hood style ventures and the wave of overtime litigation sweeping major corporations across the country.  Since 2000, overtime litigation has exploded nationwide. The U.S. Chamber of Commerce decried the "FLSA litigation explosion" and its having become the "claim du jour" for plaintiffs' attorneys.

Thierman shrugs at such concerns. The alternative, in his view, would be to have the laws enforced by a government bureaucracy.  Thierman professes to be helping the little guy: "I'm interested in the middle class—those are my folks."

[H/T to George's Employment Blawg and the Ohio Employment Law Blog]

Wage and Hour laws, such as the Fair Labor Standards Act (FLSA), present some of the most challenging hurdles for employers. The FLSA and its state and federal counterparts carry extraordinary penalties and, if an employee successfully brings suit to collect unpaid wages, employers are left holding the tab for the wage amount, multiplied twice, and the plaintiff's attorney's fees. This makes a claim for unpaid overtime a huge risk for employers and an even bigger attraction for plaintiffs' lawyers.

So why don't employers "just" abide by the laws and avoid these risks? Well, I suppose for a lot of reasons. One that we hear quite often is that, "everyone" in their industry pays this way!! And they're likely telling the truth. Often industries develop certain wage payment practices especially suited for the unique way in which their employees work. Some companies, for example, are highly seasonal and tend to employ a great deal of teens during summer months. To avoid the paperwork nightmare for employee benefits, they pay the young people on a "per diem" rate.

Or, what about the salon industry? Stylists' earnings are based partially on service-based commissions, partially on product-based commissions, as well as a flat hourly rate. But then, just to make it more complicated, many salons historically have required stylists to reimburse the business for the products that they use. Sort of like the typical office worker reimbursing their employers for each pencil they use to perform their jobs. As you can probably imagine, these unique pay arrangements can create major wage payment nightmares if the Department of Labor becomes involved.

And still, when an employer calls us to seek counsel on an employment matter and learns of the great perils of their payroll system, they just do not want to believe us. It is not uncommon for them to resist a payroll restructuring. In part because change can be difficult, time- and resource-consuming, and, well, just because the idea of change puts most of us on high alert, even if just temporarily.

But another, very common, reason for the push-back we get from otherwise loyal and trusting clients? "Because everybody pays like this!!" It can be difficult to change your payroll habits, certainly. But think of yourself as a trendsetter. Or, better yet, think of yourself laughing all the way to the bank as competitors get stuck with serious fines, penalties, and civil suits. Then call your employment counsel and have them conduct an audit of your compensation structure.

EXTRA: For those of you just dying to know more about overtime calculations, take a look at the Department of Labor's handy Overtime Calculator. You answer a series of uncomplicated but unexpectedly detailed questions and, voila! The Calculator pops out the amount of overtime owed, if any, to the employee. It is a great tool (and free), thanks to Uncle Sam, so take advantage of it next time you're pondering the world of wage payment.