Our report for February follows.
Wang v. Hearst (Southern District of New York): A former intern filed this case on February 1 raising the question of whether Hearst Corp. violated the FLSA and New York wage and hour laws by failing to pay interns minimum wages and overtime compensation. This case could have far-ranging implications for businesses that hire students during summer or vacation breaks.
Duran v. U. S. Bank Nat'l Ass'n. (California Court of Appeals): On February 6, the Appeals Court overturned a $15M award to 260 present and former bank officers because the trial court employed a statistically flawed trial plan. This decision re-enforces the obstacles to class representatives who attempt to base their class motions on a sampling of class members.
Calderon v. GEICO Gen. Ins. Co.: Judge Titus of the United States District Court for the District of Maryland on February 14 weighed in on the side of the United States Courts of Appeals for the Second and Seventh Circuits, finding that the FLSA's opt-in provision for class members is not "inherently incompatible" with the opt out provisions of Federal Rule 23, meaning that FLSA and state wage and hour claims may co-exist in the same lawsuit. Other federal courts have ruled differently; this issue will continue to challenge litigators and their clients.
Orton v. Johnny's Lunch Franchise: The United States Court of Appeals for the Sixth Circuit found on February 21 that an executive whose salary was suspended due to cash flow problems was entitled to FLSA protection even if had he been paid he would have been exempt. Employers that suspend or reduce compensation during challenging financial times need to beware that the FLSA may kick in unexpectedly.
Smith v. Family Video Movie Club Inc.: On February 22, the United States District Court for the Northern District of Illinois granted conditional class status to video store employees who allege that they were required to work "off the clock." Obviously, any company that calls for employees to work without compensation is inviting problems.
Mountaire Farms Inc. v. Perez: In this closely watched "donning and doffing" case, on February 27, the Supreme Court let stand a ruling from the United States Court of Appeals for the Fourth Circuit that poultry workers' time putting on and taking off protective gear is compensable because it is "integral and indispensable" to their jobs. Any business where employees wear protective coverings needs to pay careful attention to the decision of the Court of Appeals in this case as well as related opinions from other federal courts.
In other developments (demonstrating the serious priority federal and state governments are giving to wage and hour matters):
Attorney General of Illinois--On February 7, Attorney General Lisa Madigan reminded employers that her office will vigorously enforce their obligations under the state's Wage Payment and Collection Act, Minimum Wage Law, and Prevailing Wage Law.
DOL and State of California--On February 9, the U. S. Department of Labor and the California Labor Commissioner announced an agreement to coordinate efforts to combat employers' intentional misclassification of workers.
Attorney General of Massachusetts--On February 14, after an investigation by the Office of the Attorney General of Massachusetts, the Executive Office of Labor and Workforce Development and the Joint Enforcement Task Force on Underground Economy and Employee Misclassification, five subcontractors working at home sites were ordered to pay $409,777 in back wages and penalties for wage and hour violations and $141,000 in outstanding revenue to the Massachusetts unemployment system.
San Francisco--On February 15, a number of state and local agencies announced their collaboration in obtaining $316,000 in back wages and tips from two Asian restaurants, and for missed meal and rest breaks.
United Stated Department of Labor, Wage and Hour Division--The DOL announced on February 15 that Norwegian Cruise Line had agreed to pay $526,602 in back wages to 2059 employees for violations of the FLSA's minimum wage, overtime and record keeping provisions. Among other misdeeds, NCL allegedly failed to pay employees overtime for emergency drills and for time worked before their scheduled shifts began. On February 17, the WHD announced that two Texas companies had paid $201,572 for having paid drivers on a basis other than the number of hours worked, resulting in a failure to pay overtime in violation of the FLSA.