Volunteer or Employee? Get It In Writing.

By Kathleen J. Jennings (kjj@wimlaw.com)

Volunteer or employee? A recent case out of the 6th Circuit answers this question for a group of adults who volunteered at a church’s for-profit restaurant business. (Acosta v. Cathedral Buffet, Inc., 6th Cir., No. 17-3427, opinion issued 4/16/18).

The Department of Labor (DOL) sued the Cathedral Buffet because it relied heavily on work performed by recruited church volunteers. The U.S. District Court for the Northern District of Ohio ruled in favor of the DOL in March 2017, finding that the church members were coerced into volunteering at the restaurant and awarded the Labor Department a total of $388,508.

The 6th Circuit Court of Appeals reversed that decision and held that the district court did not apply the proper analysis to the situation. According to the Circuit Court decision, the first step in the analysis must be to decide if adult workers expect compensation for their work. Only if a worker expects compensation may a court then “assess the economic realities of the working relationship,” the decision went on to say. Under the Fair Labor Standards Act, courts look at the “economic realities” of an employer-worker relationship to determine if minimum wage and/or overtime is payable.

In Cathedral Buffet’s case, the recruited volunteers didn’t accept wages, in-kind goods or services, or tips for their work. However, the evidence showed that they did not expect to, because they volunteered their work to further their religious beliefs, and several of them provided sworn affidavits to that effect.

The 6th Circuit distinguished this case from a case decided by the 10th Circuit in March 2018 in which a pecan ranch was ordered to pay $200,000 for using unpaid child labor through an arrangement with the Fundamentalist Church of Jesus Christ of Latter-Day Saints. In the 10th Circuit case, there was evidence that the children were coerced into working for the pecan ranch. (Acosta v. Paragon Contractors Corp., 10th Cir., No. 17-4025, 3/13/18).

Pro tip: Want to avoid trouble with the DOL? Prepare documentation for a volunteer to sign that acknowledges that the volunteer does not expect compensation for his/her work and why (i.e., religious conviction, service to the community or a particular cause, etc.).

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

The US Department of Labor/Wage and Hour Division Launches PAID Program

By Kathleen J. Jennings (kjj@wimlaw.com)

Today, the Wage and Hour Division (WHD) of the U.S. Department of Labor launched a new nationwide pilot program, the Payroll Audit Independent Determination (PAID) program. PAID facilitates resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The program’s primary objectives are to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.

Under the PAID program, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to self-report those violations. Employers may then work in good faith with WHD to correct their mistakes and to quickly provide 100% of the back wages due to their affected employees. According to the DOL, if an employer chooses to participate in the PAID program and to “proactively work with the Division to fix and resolve their potential compensation errors,” the DOL will not impose penalties or liquidated damages to finalize a settlement.

An employer may not initiate the process to resolve any issues for which DOL is already investigating the employer, or which the employer is already litigating in court, arbitration, or otherwise. An employer likewise may not initiate the process when an employee’s representative or counsel has already communicated an interest in litigating or settling the issue. Also, employers cannot use the program to repeatedly resolve the same violations, as this program is designed to identify and correct non-compliant practices.

WHD is implementing this self-audit pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the pilot program, potential modifications to the program, and whether to make the program permanent.

A reasonable question: why would employers participate in the program if they can perform their own internal audits and pay whatever additional wages they conclude are appropriate?

According the DOL, the main benefit of this program to employers is DOL supervision of the payment of unpaid wages, and the execution of valid employee releases that release their rights to privately sue the employer for the unpaid wages. Under the FLSA, private out-of-court settlements do not result in a waiver of employees’ rights to sue their employer.

Nevertheless, we advise that employers tread carefully if they choose to participate in this program. If your company does choose to participate, we recommend that you have qualified counsel assist in the process and calculations. It also remains to be seen how the DOL will treat repeat violations of issues resolved in the PAID program.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

So You Want to Hire an Unpaid Intern: the Department of Labor Has Some New Guidelines

By Kathleen J. Jennings (kjj@wimlaw.com)


The Department of Labor has issued new guidelines for employers that want to hire unpaid interns. These new guidelines are much less stringent than the previous Obama-era guidelines and should allow more employers to set up qualified unpaid internships.

Keep in mind that the FLSA requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA—in which case the FLSA does not require compensation for their work. Application of the new guidelines will determine whether an intern should be paid or not.

The new DOL guidelines use a 7 factor “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. This test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. The following seven factors are part of the test:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The “primary beneficiary test” is supposed to be a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.

If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.

Pro tip: When in doubt, it is always safer to go ahead and pay an intern at least the minimum wage.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Has Your State’s Minimum Wage Gone Up in 2018?

By Kathleen Jennings (kjj@wimlaw.com)

2018 has brought an increase in the minimum wage in some states and municipalities. (Georgia is not one of those states, however.) Below are the states that have increased their minimum wage, and , in some cases, the tipped minimum wage, in 2018:

Old Old New for 2018 New for 2018
State Categories Minimum Wage Tipped Minimum Wage Minimum Wage Tipped Minimum Wage
Alaska $9.80 $9.84
Arizona $10.00 $7.00 $10.50 $7.50
California
(26 or more employees) $10.50 $11.00
(25 or fewer employees) $10.00 $10.50
Colorado $9.30 $6.28 $10.20 $7.18
Florida $8.10 $5.08 $8.25 $5.23
Hawaii $9.25 $8.50 $10.10 $9.35
Maine $9.00 $5.00 $10.00 $5.00
Michigan $8.90 $3.38 $9.25 $3.52
Minnesota
(Large employer (annual gross revenue of $500,000 or more)) $9.50 $9.65
(Small employer (annual gross revenue of less than $500,000)) $7.75 $7.87
Missouri $7.70 $3.85 $7.85 $3.925
Montana $8.15 $8.30
New Jersey $8.44 $6.31 $8.60 $6.47
New York
(NYC – more than 10 employees) $11.00 $7.50* $13.00 $8.70
(NYC – 10 or fewer employees) $10.50 $7.50 $12.00 $8.00
(Nassau, Suffolk, & Westchester Counties) $10.00 $7.50 $11.00 $7.50
(The rest of the State) $9.70 $7.50 $10.40 $7.50
Ohio $8.15 $4.08 $8.30 $4.15
Rhode Island $9.60 $3.89 $10.10 $3.89
South Dakota $8.65 $4.325 $8.85 $4.425
Vermont $10.00 $5.00 $10.50 $5.25
Washington $11.00 $11.50

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Whatever Happened to the Proposed Increase in the Salary Threshold for Overtime?

By Kathleen Jennings (kjj@wimlaw.com)

Last year at this time, employers were scrambling to comply with the Department of Labor’s new regulations which would have more than doubled the existing salary threshold for the overtime exemption for executive, administrative, and professional employees from $23,660/year ($455/week) to $47,892/year ($921/week). The regulations were projected to make 4.2 million more workers eligible for overtime. Advocates for the increase asserted that the new regulations would bring more families closer to a living wage. Businesses argued that the regulations would increase their labor costs to the point where they would need to consider decreasing base salaries or lowering the number of their employees.

Before the regulations took effect on December 1, 2016, everything came to a halt when a federal district court enjoined implementation of the regulations. The Obama administration appealed the injunction to the Fifth Circuit of Appeals. In the meantime, Trump was elected President. Now his Labor Department is handling the appeal on behalf of the government.

So what is happening with those regulations now? Will the salary threshold for the overtime exemption increase?

We received a clue on June 30, 2017, when lawyers for the Labor Department told the Fifth Circuit Court of Appeals that the Labor Department plans to revise the pending Obama era overtime rule. They asked the court to affirm the DOL’s right to use salary levels to determine eligibility for time-and-a-half pay in the future, but to ignore the specific levels contained in the Obama-era regulation: “The Department requests that this Court not address the validity of the specific salary level set by the 2016 final rule ($913 per week), which the Department intends to revisit through new rulemaking.”

In other words, the DOL wants the court to affirm that the department has the authority to set a salary threshold under which workers are automatically eligible for overtime pay for hours worked beyond 40 per week so that the current DOL can make its own changes to that threshold amount.

When will this happen? Not anytime soon. The DOL will not initiate any new rulemaking on the salary threshold for overtime until after the Fifth Circuit rules that the DOL has the authority to do so.

What we know now: The Obama-era increase in the salary threshold for overtime will not be implemented while Trump is in office. Whether the Trump DOL will make any moves to increase that threshold, albeit at a much lower level, remains to be seen.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2017 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

WAGE & HOUR OPINION LETTERS RETURN!


By Christopher Adams (cda@wimlaw.com)

On June 27, 2017, the U.S. Department of Labor announced that the Wage & Hour Division would resume issuing Opinion Letters. The Obama Administration had discontinued the Department’s long-standing practice in March 2010 in favor of “general guidance,” which in practice allowed the Department greater latitude in changing its litigating position. “Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” said Secretary of Labor Alexander Acosta. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.” The Department’s announcement today can be found here – https://www.dol.gov/newsroom/releases/whd/whd20170627.

The Wage & Hour Division had been publishing Opinion Letters for roughly seventy (70) years prior to the Obama Administration’s suspension of the practice. Letters were issued in response to specific questions from employers regarding the statutes enforced by WHD, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). The purpose of Opinion Letters was to “provide official written explanations of what the FLSA or the FMLA requires in fact-specific situations.” In addition to providing guidance, Opinion Letters could, to a degree, be used to support a “good faith” defense in later litigation, relieving an errant employer from having to pay liquidated damages in the event a violation was found.

Numerous employer, industry and HR groups had called for a return of the practice. In conjunction with its announcement, DOL has created a new Web page that allows interested parties to search past Opinion Letters or submit a request: https://www.dol.gov/whd/opinion/.

We welcome the return of this traditional source of guidance, which is of great value to employers seeking to comply with these laws.

Chris Adams is a paralegal and a member of the Wage and Hour Practice Group at Wimberly, Lawson, Steckel, Schneider & Stine, P.C. He can be reached at cda@wimlaw.com.

©2017 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.


Six Federal Circuits Now Allow Recovery of Emotional Distress Damages in FLSA Retaliation Cases

By Kathleen Jennings (kjj@wimlaw.com)

In a case of first impression, this week, the Fifth Circuit Court of Appeals held that workers claiming retaliation for funder the Fair Labor Standards Act (FLSA) may recover damages for emotional distress, in addition to the other damages available under the FLSA. (Pineda v. JTCH Apartments, LLC, 5th Cir., No. 15-10932, 12/19/16). The Fifth Circuit joined five other federal appeals courts (1st, 6th, 7th, 8th, 9th) that previously have allowed such damages in FLSA retaliation cases.

Pined, who performed maintenance services for an apartment complex in exchange for reduced rent, sued his employer for unpaid overtime. He prevailed at trial, and the district court awarded him more than $6,600 for unpaid overtime, retaliation and liquidated damages. However, the district court did not allow the jury to consider emotional distress damages for his retaliation claim. The Fifth Circuit reversed this ruling, holding that Pineda can recover damages or his alleged emotional distress. According to the Fifth Circuit, the “expansive language” in a 1977 amendment to the FLSA “should be read to include the compensation for emotional distress” that is typically available to workers who sue for retaliatory discharge.

Emotional distress damages generally are difficult to quantify because they are determined by the jury and can be influenced by sympathy for the plaintiff or anger at the company. In Pineda’s case, it is likely that the jury did not look favorably upon his employer—just three days after Pineda filed his lawsuit, the apartment complex sent Pineda and his wife a notice to vacate their apartment.

Takeaway: Lawsuits based upon wage and hour violations have become very attractive to attorneys who represent plaintiffs, and the availability of damages for emotional distress in retaliatory discharge situations will make these cases even more attractive to them. As in the case of any decision involving an employee who has engaged in protected activity, an employer should consult with experienced employment law counsel before terminating an employee who has filed a complaint for unpaid overtime.

 

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2016 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.