Articles Posted in Wage and Hour Disputes

A group of workers in several warehouses owned by Walmart recently settled a lawsuit against the company that operates the warehouses under a contract with the retailer. The settlement includes $21 million in back pay, interest, and penalties, and that amount will reportedly be the sole responsibility of the contractor. The plaintiffs initially sued the contractor and several affiliated companies for alleged violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and California labor statutes. The court granted their motion to amend their complaint to include Walmart itself under the theory that the contractors and it were joint employers of the plaintiffs. Carrillo, et al v. Schneider Logistics, Inc., et al, No. 2:11-cv-08557, third am. complaint (C.D. Cal., Jan. 11, 2013).

The plaintiffs worked in warehouses owned by Walmart in Eastvale, California at various times between approximately January 2003 and February 2012, according to their most recent complaint. Schneider Logistics, Inc. and several other businesses had contracts with Walmart to provide warehousing, trucking, and other services at the warehouses. The plaintiffs were employees of one or more of the contractors, in the sense that they received paychecks and other features of employment from one or more of those companies.

The allegations against the defendants included dangerous working conditions, minimum wage violations, and failure to pay overtime. The plaintiffs further alleged that the defendants failed to keep accurate payroll records, and even falsified records, in an effort to conceal wage violations and unlawfully withhold earnings from workers. In October 2011, the initial group of plaintiffs filed the lawsuit on behalf of themselves and more than 200 other workers who consented to suit under the FLSA. 29 U.S.C. § 216(b).
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Fast food franchises top the list of wage and hour violators for the past thirteen years, according to a CNN analysis of data obtained from the Wage and Hour Division (WHD) of the federal Department of Labor (DOL). CNN identified Subway, McDonald’s, and Dunkin’ Donuts as the franchises with the most investigations, violations, and fines from 2000 to 2013. All three of these companies are franchises with thousands of locations around the country, meaning that the parent companies are not responsible for employment matters at many individual restaurants. Franchisees, independent businesses that operate one or more restaurants under a franchise agreement with a parent company, are usually the ones held liable for wage violations. The system of allowing hundreds or thousands of small businesses to operate individual franchises is part of what is sometimes called the “fissured workplace,” which makes widespread enforcement of minimum wage and other employment laws difficult.

The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., requires payment of a minimum wage, currently $7.25 per hour, to employees. States and cities may set the minimum wage at a higher rate. Employers must pay hourly workers time-and-a-half for overtime, generally defined as more than forty hours in a week. Common violations include requiring additional, unpaid work from employees, such as time spent changing into or out of work uniforms or equipment. When added to paid hours, this additional time may reduce an employee’s effective hourly rate below minimum wage. The WHD investigates alleged violations of these wage laws, and employees may bring lawsuits to recover back pay and other damages.

Subway has more than 26,000 locations in the U.S., the most of any fast food franchise. CNN’s analysis of the WHD data found more than 1,100 investigations of Subway franchisees from 2000 to 2013, which identified about 17,000 violations of the FLSA and resulted in employee reimbursements of over $3.8 million. Common violations included requiring deduction of a thirty-minute lunch break, regardless of whether the employee took a break, and refusing to pay employees for required closing procedures.
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Former cheerleaders for the National Football League (NFL) have filed multiple lawsuits in New Jersey, New York, California, Ohio, and Florida for alleged violations of state and federal wage laws. Allegations include unpaid work, misclassification as independent contractors, and minimum wage violations. A report by Amanda Hess in Slate notes that cheerleading for professional football began as a volunteer activity, at a time when no one made much money from the sport. While players and coaches have significantly increased their income, cheerleaders are still paid almost as though they were volunteers.

A former Oakland Raiders cheerleader, who goes by Lacy T. in her complaint, filed the first lawsuit, Lacy T. v. The Oakland Raiders, et al, No. RG14710815, complaint (Cal. Super. Ct., Alameda Co., Jan. 22, 2014). She worked as a “Raiderette” during the 2013-14 football season and allegedly received $125 per game no matter how many hours she worked. She also claimed that cheerleaders do not receive any pay until the end of the Raiders’ season in January. Her lawsuit identified a class of cheerleaders employed as Raiderettes from January 22, 2010 to the present, and asserted causes of action for violations of minimum wage, overtime, and other provisions of the California Labor Code.

The U.S. Department of Labor found in March that the team is a “seasonal” employer, and therefore is exempt from federal minimum wage laws. California labor law, however, does not have this exemption. A second lawsuit against the team, Caitlin Y., et al v. The National Football League, et al, No. RG14727746, complaint (Cal. Super. Ct., Alameda Co., Jun. 4, 2014), makes similar wage-related allegations, but also claims sexual harassment and other unlawful practices.
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A factory worker’s lawsuit alleges that her employer violated state labor laws by failing to allow her adequate restroom breaks, then firing her for improvising her own solution. A U.S. district court denied the defendant’s motion to dismiss in Prince v. Electrolux Home Products, Inc., No. 13-cv-02316, mem. op. (D. Minn., Feb. 14, 2014), finding that the plaintiff had met the pleading requirements for wrongful termination or retaliation. The plaintiff in this case can take advantage of a state law requiring reasonable restroom breaks. The federal Fair Labor Standards Act (FLSA) does not expressly require employers to allow restroom breaks, although the Occupational Safety and Health Administration (OSHA), has interpreted its regulations to mean that employers may not unreasonably deny access to restroom facilities.

The plaintiff was an assembly-line worker at a plant in St. Cloud, Minnesota. She suffers from a medical condition that causes her to need to use the restroom frequently. She alleges that she asked her supervisor for permission to take a restroom break several times over the course of thirty to forty minutes, but was repeatedly ignored or denied. Eventually, the 51 year-old plaintiff was no longer able to wait, so she lined an empty box with a plastic bag, concealed herself as best she could near her workstation, and urinated in the box. The following day, she was terminated for violating a company health and safety policy.

The supervisor allegedly refused permission for restroom breaks on a regular basis, and the plaintiff claims that he had instructed her to use a box or a bucket in the past. The plaintiff was out of work for about nine months until an arbitrator reversed her termination in April 2013, finding that it violated the union collective bargaining agreement. Even though she got her job back, the plaintiff filed suit against her employer in federal court in August 2013, asserting causes of action for violations of the Minnesota Occupational Safety Act (MOSHA) and a state statute requiring adequate restroom breaks for employees.
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Workers and state regulators have filed multiple lawsuits against McDonald’s, the national fast-food chain, and its franchisees for alleged violations of state and federal wage and hour laws. The company has faced widespread protests from employees, who allege that they have been denied overtime pay. A federal lawsuit filed in mid-March 2014 in New York claims that the company regularly failed to pay employees for time they were required to be at work, failed to pay overtime as required by law, and did not reimburse employees for certain work-related expenses. The New York Attorney General’s office announced around the same time that it has settled a claim against a McDonald’s franchisee regarding violations of state wage and hour laws.

Six McDonald’s employees filed a putative class action lawsuit against McDonald’s for violations of the federal Fair Labor Standards Act (FLSA) and New York laws regulating minimum wage and the cost of maintaining work uniforms. Beard, et al v. McDonald’s Corp., et al, No. 1:14-cv-01664, complaint (E.D.N.Y., Mar. 13, 2014). McDonald’s has annual gross revenues of more than $27 billion, according to the complaint, and it directly operates thirty-four restaurants in New York out of more than 33,000 around the world. The plaintiffs work at McDonald’s restaurants in the Queens, New York area. Their job duties include working the cash registers and drive-through windows, food preparation, restocking, and cleaning.

The plaintiffs state that they are paid a “nominal hourly rate only at or slightly above the minimum wage.” Id. at 2. The company requires them to maintain their own work uniforms, but does not reimburse them for maintenance expenses. It also does not pay them for time spent on uniform maintenance. Because of this additional, uncompensated work time, the plaintiffs claim that their wages are below the minimum set by the FLSA and state law. The lawsuit claims violations of the New York Hospitality Industry Wage Order, 12 N.Y.C.R.R. Part 146, which requires employers to reimburse employees for certain expenses related to uniform maintenance, as well as minimum wage violations under FLSA and state law.
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An amendment to the New Jersey Law Against Discrimination (NJLAD) that took effect in January 2014 protects employees from retaliation by employers for asking about co-workers’ salaries as part of an investigation into wage discrimination. Prior to this amendment, New Jersey labor law already protected workers, commonly known as whistleblowers, who investigated or reported various unlawful practices by their employers, but did not protect workers who investigated certain practices. Many companies employment have “salary secrecy” policies that prevent employees from inquiring about other employees’ wages, making wage discrimination claims difficult.

Despite laws at the state and federal level prohibiting overt wage discrimination based on gender, the gap in wages between men and women is alive and well in New Jersey and around the country. Salary secrecy is among the biggest reasons for this continued disparity. Companies discourage employees from discussing pay with one another, and in some cases, even terminate employees for asking about other employees’ wages. A 2012 Forbes article found that companies with salary secrecy policies often had little justification for the policies aside from management’s unwillingness to explain their salary decisions to others. Such policies may also increase employee dissatisfaction and reduce overall efficiency, while more transparent policies have had positive results. The new amendment to the NJLAD effectively bans salary secrecy in New Jersey.

New Jersey law prohibits sex discrimination “in the rate or method of payment of wages.” N.J. Rev. Stat. § 34:11-56.2. It also prohibits employers from retaliating against employees who complain to the employer or the New Jersey Civil Rights Commission about alleged wage discrimination. N.J. Rev. Stat. § 34:11-56.6. The statute does not specifically mention investigations of possible wage discrimination, and this is where salary secrecy policies can prevent employees from asserting their rights.
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A 2012 law amending the New Jersey Equal Pay Act requires employers with at least fifty employees to provide official notice to workers of their rights regarding gender equity under state and federal anti-discrimination and pay equity statutes. The New Jersey Department of Labor and Workforce Development (NJDOL) published final notice forms on January 6, 2014. Under the thirty-day deadline established by the 2012 law, employers had until February 5 to provide the notice to all current employees. The 2012 law does not identify a penalty for failing to meet this deadline, and the NJDOL has not stated how it will handle noncompliance. Penalties for similar regulatory infractions might offer some idea of what employers might face.

The New Jersey Assembly passed A2647, which “[r]equires employers [to] post notice of worker rights under certain State and federal laws,” on June 25, 2012, and the governor signed it into law on September 19, 2012. It did not provide a specific date for employers to comply with its requirements, but rather set a deadline of thirty days after publication of final notice forms by the NJDOL. This took place on January 6, 2014, making the initial deadline February 5. For employees hired after that date, employers must provide the notice by the end of the calendar year in which an employee was hired.

The official notice form published by the NJDOL, entitled “Right to be Free of Gender Inequity or Bias in Pay, Compensation, Benefits or Other Terms and Conditions of Employment,” outlines workers’ rights under two federal statutes and two New Jersey statutes:
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Federal immigration law prohibits businesses from employing individuals who do not have authorization to work in the U.S., either because they have certain types of temporary visas or because they lack legal immigration status altogether. Courts have wrestled with the question of how much protection federal and state labor laws offer to undocumented immigrants. The U.S. Supreme Court ruled that undocumented immigrants may not recover damages for violations of the National Labor Relations Act (NLRA). Recent appellate court decisions, however, have left the possibility open that relief may be available under state labor and employment laws and the federal Fair Labor Standards Act (FLSA).

Under the NLRA, the National Labor Relations Board (NLRB) enforces laws protecting the rights of employees to engage in activities related to union organizing. This includes filing lawsuits seeking back pay and other damages on behalf of employees. The U.S. Supreme Court ruled in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), that undocumented immigrants may not recover damages under the NLRA. It held that the Immigration Control and Reform Act of 1986 (IRCA), which established the current system of immigrant work authorization, prohibited the employment of the worker in question and therefore preempted his NLRA claims. This preclusion only affected the immigrant employee. The NLRB could still pursue penalties against the employer for NLRA violations affecting the employee.

Appellate and district courts have generally followed Hoffman‘s ruling with regard to IRCA’s preemption of state and local employment laws. A federal district court in Pennsylvania cited preemption under IRCA in striking down a city ordinance placing restrictions on employment and housing for undocumented immigrants. Lozano v. City of Hazelton, 496 F.Supp.2d 477, 518-19 (M.D. Pa. 2007). In a case involving an NLRB ruling issued before Hoffman, the Second Circuit Court of Appeals refused to enforce the ruling after Hoffman. NLRB v. Domsey Trading Corp., 636 F.3d 33 (2nd Cir. 2011). Federal labor laws separate from the NLRA have not received much direct scrutiny from courts on the question of preemption, however, until recently.
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A federal court has ordered a restaurant company to pay a group of employees liquidated damages under the Fair Labor Standards Act (FLSA). In Dobson, et al, v. Timeless Restaurants, Inc. d/b/a Denny’s, a number of diner servers sued their employer for failure to pay unpaid minimum wages and overtime. According to the restaurants workers, they were required to participate in a tip pool that redistributed a portion of their earnings to other employees whose wages were not tip-based.

After a jury found Timeless Restaurants violated the FLSA, the court considered whether to award the workers liquidated damages. The employees argued that such an award was merited under the FLSA because the jury determined that Timeless acted willfully when it failed to pay wait staff minimum and overtime wages. Timeless, on the other hand argued that the jury’s determination was not determinative and the company “had reasonable grounds to believe that its acts or omissions did not violate the FLSA.”

According to the court, liquidated damages are not required under the FLSA if an employer who failed to pay a worker the appropriate wages acted in good faith. Still, the statute places the burden for demonstrating such a good faith belief on the employer. According to the district court, Fifth Circuit precedent states that an employer may not demonstrate it acted in good faith after a jury has determined the employer willfully violated the FLSA. As a result, Timeless was ordered to pay liquidated damages for its willful FLSA violations.
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Internships are often a good way for college students and others to gain experience in a field, such as film or journalism, in the hopes of getting a full-time job after graduation. Some of these internships include a salary, stipend, or course credit, but many interns essentially work for free. While some students might be willing to make such a sacrifice in order to gain experience or contacts, unpaid internships might violate state or federal labor laws. The federal Fair Labor Standards Act (FLSA) and other laws provide guidelines to help identify when employers must pay interns at least minimum wage, and multiple pending lawsuits are seeking to enforce interns’ right to compensation for their work.

The FLSA, 29 U.S.C. §§ 201 et seq., has a very broad definition of “employ,” describing it as “to suffer or permit to work.” 29 U.S.C. § 203(g). It allows exceptions for individuals volunteering for charitable groups and other nonprofit organizations, but generally nearly anyone working for a for-profit company may be considered “employed.” The U.S. Department of Labor has developed a set of guidelines for determining whether an internship falls under the FLSA’s coverage regarding overtime compensation and minimum wage. An internship program that meets these six criteria is not subject to FLSA requirements:
1. The internship resembles a training program in an educational institution;
2. The purpose of the internship is to benefit the intern;
3. The employer does not benefit directly from the intern’s experience;
4. The intern works under existing employees and does not displace them;
5. The employer makes no promise or representation of a job after the internship; and 6. Both the employer and the intern understand and agree that the intern will not receive compensation for the internship.
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