Hunton Employment & Labor Perspectives

As we previously reported, the U.S. Department of Labor (“DOL”) published a final rule in April 2024 (the “2024 Rule”), raising the salary threshold for the Fair Labor Standards Act’s (“FLSA”) exemptions for executive, administrative, professional, and computer employees and the total annual compensation level for the highly compensated employee exemption. The 2024 Rule also provides for periodic, automatic increases going forward. The 2024 Rule went into effect in July 2024.

On November 15, 2024, however, a Texas federal court struck down the 2024 Rule on a nationwide basis.

We recently posted an article on Hunton’s Retail Law Resource blog regarding the U.S. Supreme Court’s decision to grant cert E.M.D. Sales, Inc. v. Carrera.  In that case, the Supreme Court is expected to clarify the burden of proof that employers must meet in order to prove that employees are exempt from the minimum wage and overtime requirements under the Fair Labor Standards Act.

Most companies know the Fair Labor Standards Act (“FLSA”) requires employers to pay employees a minimum hourly wage plus overtime, unless an exemption applies. What may be surprising, however, is how broadly the FLSA and courts applying it define who is an “employer.”

On Tuesday, April 23, 2024, the U.S. Department of Labor (“DOL”) published the final version of a rule originally proposed in September 2023, raising the salary threshold for the Fair Labor Standards Act’s (“FLSA”) exemption for executive, administrative, professional, and computer employees and the total annual compensation level for the highly compensated employee exemption. The final rule also provides for periodic, automatic increases going forward. So, what should employers know about the final rule, and how can they stay compliant with this shifting landscape?

On March 12, 2024, the United States Court of Appeals for the Sixth Circuit reversed two separate district court decisions addressing how pizza delivery drivers should be reimbursed for their vehicle-related expenses under the Fair Labor Standards Act (FLSA).

The underlying cases involved minimum wage claims under the FLSA.  In both cases, the drivers alleged that their employers had not sufficiently reimbursed them for the expenses they incurred while using their personal vehicles to make deliveries, resulting in the employees earning less than the minimum wage.  One employer ...

The Department of Labor’s Wage and Hour Division is expected to propose new rules on independent contractor classification and overtime entitlement requirements in the coming weeks.  The proposals would alter the qualifications for certain employees to receive overtime payments under the Fair Labor Standards Act when they work in excess of 40 hours in one week.

Earlier this month, Democrats in the House of Representatives introduced the “Wage Theft Prevention and Wage Recovery Act” (“Act”). This proposed legislation seeks to amend the Federal Labor Standards Act (“FLSA”) in several key ways.

First, the Act would require all employers to provide regular pay stubs and initial salary disclosures.

Second, the Act would change wage recovery by requiring payment at an employee’s agreed-upon wage rate, rather than at the minimum wage or minimum overtime wage rates, which the FLSA has never done and has traditionally been within ...

On April 11, 2022 Governor Glenn Youngkin signed HB 1173 into law, which replaces various provisions of the Virginia Overtime Wage Act (VOWA) with provisions largely consistent with the Fair Labor Standards Act (FLSA).

On May 2, 2022, the Supreme Court granted certiorari to Helix Energy Solutions Group Incorporated after Helix lost before the en banc United States Court of Appeals for the Fifth Circuit in a sharply-divided opinion last year.  In Hewitt v. Helix Energy Solutions Grp., Inc., 15 F.4th 289 (5th Cir. 2021), the Fifth Circuit held 12-6 that employers must guarantee their day-rate workers a minimum weekly payment that is reasonably related to the amount those workers actually earn in that timespan for their workers to be exempt from the FLSA’s overtime requirements.  This minimum weekly payment must be a predetermined amount that does not change based on the number of days or hours actually worked, if the employer wishes to enjoy the FLSA’s exemptions to paying its day-rate workers overtime.

A small but growing number of employees are asking for cryptocurrency as a form of compensation.  Whether a substitute for wages or as part of an incentive package, offering cryptocurrency as compensation has become a way for some companies to differentiate themselves from others.  In a competitive labor market, this desire to provide innovative forms of compensation is understandable.  But any company thinking about cryptocurrency needs to be aware of the risks involved, including regulatory uncertainties and market volatility.

On September 9, 2021, the Fifth Circuit issued a 12-6 opinion in Hewitt v. Helix Energy Solutions Group, Inc., 15 F.4th 289 (5th Cir. 2021) that clarified the requirements for day rate workers to fall within one of the FLSA’s exemptions from overtime payment.  This ruling was hotly-contested because it made clear that employers must take additional steps to properly classify their day rate workers as exempt employees, even when those employees clearly exceed the financial threshold of the highly compensated exemption.  Many expect the decision to substantially affect the course of day rate FLSA litigation in the Fifth Circuit, especially misclassification disputes within the energy industry.

In a huge win for California employers, the California Court of Appeals recently confirmed that courts have discretion to strike claims for penalties under the Private Attorneys General Act of 2004 (“PAGA”) if the claims will be unmanageable at trial.  This decision will help employers defeat—or significantly pare down—the broad and unwieldy claims for PAGA penalties that have become popular with the plaintiffs’ bar.

An Alabama federal judge granted AutoZone's request to dismiss nearly 500 current and former store managers from a nationwide collective action that the national auto-parts chain had misclassified them as exempt under the Fair Labor Standards Act (“FLSA”) and denied them overtime, holding those plaintiffs had missed the three-year statute of limitations and that plaintiffs had failed to establish equitable tolling should apply to save their claims.

A federal district court in Florida recently declined to conditionally certify a nationwide collective action brought under the Fair Labor Standards Act (“FLSA”) because the plaintiff did not show sufficient evidence that she was similarly situated to other restaurant managers who wanted to join.

On May 19, 2020, the US Department of Labor (“DOL”) issued its final rule likely expanding the FLSA’s Section 7(i) overtime exemption for commission-based workers in retail and service industries by withdrawing the long-standing, historical list of businesses that the DOL identified as falling within or outside of what it deemed to be a retail or service establishment.

In a case of first impression, the Third Circuit rejected the view of the United States Department of Labor, ruling that incentive payments from third parties are not necessarily included in the calculation of an employee’s overtime rate.

In Secretary United States Department of Labor v. Bristol Excavating, Inc., No. 17-3663, 2019 WL 3926937 (3d Cir. Aug. 20, 2019) (“Bristol”), the Court of Appeals overturned a District Court’s order holding that all incentive payments made by third parties must be included in an employee’s overtime rate under the Federal Labor Standards Act (“FLSA”). The unanimous Third Circuit panel held that the understanding of the employer and employee determines whether third-party payments should be included in the overtime rate.

Massachusetts’ highest court, The Supreme Judicial Court (“SJC”), recently issued its long awaited decision in Sullivan v. Sleepy’s LLC, SJC-12542, in which the SJC responded to certified questions of first impression from the United States District Court for the District of Massachusetts. The case is particularly important for businesses which pay employees through commissions or draws (i.e., advances on commissions), particularly in the retail context where the ruling departs considerably from federal law.

The U.S. Department of Labor on Thursday issued its new proposal to amend the salary threshold for employees to qualify for the Fair Labor Standards Act’s white-collar exemptions from overtime pay requirements to $35,308 per year ($679 per week).

The much-anticipated proposed rule would raise the minimum annual salary requirement for the white-collar exemption to the Fair Labor Standards Act from $23,600, a level that has been in place since 2004.  The DOL estimates that the rule change will make just more than one million new employees eligible to earn overtime, assuming that employers do not increase employees’ salary levels to meet or exceed the new level.

The California Supreme Court issued a decision Monday in a case that is sure to cause headaches for employers when compensating employees through flat sum bonuses.  In Alvarado v. Dart Container Corporation of California (S232607) the Court held that for purposes of calculating the regular rate, a flat sum bonus is to be allocated only to the nonovertime hours worked. This holding departs from the calculation methods broadly considered compliant outside of California under the Fair Labor Standards Act (“FLSA”) and regulations issued by the U.S. Department of Labor.

The Sixth Circuit recently affirmed a district court’s summary judgment decision finding that an employer, Plastipak Holdings, Inc., Plastipak Packaging, Inc., Plastipak Technologies, LLC, Plastipak, and William C. Young (collectively, “Plastipak”) properly had paid employees using the “fluctuating workweek” method and dismissing plaintiffs’ claims for underpayment of wages under the Fair Labor Standards Act (“FLSA”).

On February 1, 2018, the United States District Court for the Eastern District of Pennsylvania dismissed an overtime class action suit brought on behalf of a group of former democratic campaign workers for their work during the 2016 presidential election.  See Katz v. DNC Services Corp., Civil Action No. 16-5800 (E.D. Pa. Feb. 1, 2018).  In dismissing the overtime suit, the Court relied on an often-overlooked defense to the Fair Labor Standard Act (“FLSA”) – namely, that the FLSA only covers employees engaged in interstate commerce as opposed to employees engaged in purely local activities.

On November 22, a federal judge in the Eastern District of Texas preliminarily enjoined the Department of Labor’s final overtime rule, which would have expanded overtime eligibility to executive, administrative, and professional employees making less than  $47,476 per year, who were previously exempt from the Fair Labor Standards Act’s requirements under its white collar exemption.  The final rule was scheduled to go into effect on December 1, 2016.

On November 16, 2016, Judge Amos L. Mazzant, heard more than three hours of oral argument from a group of 21 States (“State Plaintiffs”) challenging the Department of Labor’s new overtime rule. Following the hearing, the motion for a preliminary injunction of the rule was taken under advisement and a ruling is forthcoming on Tuesday, November 22,2016. Judge Mazzant’s pointed criticism of the rule during argument suggests employers may have reason to be optimistic.

As we previously reported, the Department of Labor (“DOL”) issued a proposed rule expected to significantly increase the number of employees who are eligible for overtime. Most notably, the proposed rule seeks to increase the minimum salary threshold for exempt workers from the current level of $23,660 to $50,440.

In a December 16, 2015 interview with Bloomberg BNA, Secretary of Labor Thomas Perez stated he was “confident” that the final rule would be “out by the spring of next year.” This prediction falls ahead of other recent DOL estimations. In its latest regulatory agenda, released in November, the DOL’s Wage and Hour Division estimated that the final rule would be published in July of 2016. And while speaking on a recent panel at the American Bar Association’s Labor and Employment Law conference in Philadelphia, Solicitor of Labor M. Patricia Smith predicted that the new rule was not likely to appear before “late 2016.”

On July 15, 2015, the Department of Labor (“DOL”) issued guidance which it claims is designed to reduce the misclassification of employees as independent contractors under the Fair Labor Standards Act (“FLSA”). This guidance boldly claims that “most workers are employees under the FLSA’s broad definitions.” Based on this guidance, the DOL will likely aggressively argue that workers are employees subject to the FLSA – not independent contractors.

Yesterday, the Department of Labor (“DOL”) issued a proposed rule that is expected to significantly increase the number of employees who are eligible for overtime.  The proposed rule increases the minimum salary threshold for exempt workers from the current level of $23,660 to $50,440.  The rule applies to the FLSA’s executive, administrative, professional, and computer employees exemptions, but not the outside sales exemption which does not have a salary basis requirement.

On April 1, 2015, the U.S. Court of Appeals for the Seventh Circuit decided Alvarado v. Corporate Cleaning Serv., Inc., 2015 WL 1456573 (7th Cir. Apr. 1, 2015), an important decision interpreting the Fair Labor Standards Act’s overtime requirements.  The plaintiffs in the case were twenty-four (24) window washers employed by a company servicing commercial skyscrapers in the Chicago area.  The plaintiffs argued they had not been paid certain overtime wages under the Act.  The company, CCS, admitted it had not paid overtime, but argued that an exemption applied in the case to the FLSA’s overtime requirements.

On November 12, 2014, the Ninth Circuit held  that sufficient specificity in pleading is required under the Fair Labor Standards Act (FLSA) in Greg Landers v. Quality Communications Inc.  The Ninth Circuit affirmed the dismissal of a proposed overtime class action.  While this was an issue of first impression for the Ninth Circuit, the decision falls in line with similar rulings made by the First, Second and Third Circuits and disagrees with the Eleventh Circuit holding that conclusory allegations that merely recite the statutory language are adequate.

During his most recent State of the Union Address on January 28, 2014, President Barack Obama stated that one of his top priorities in the coming year was to address what he described as “stagnant wages.”  More importantly, he warned Congress that if they did not take steps to tackle the issue soon, he was prepared to attempt to address the issue unilaterally through exercise of his executive power.

President Barack Obama is expected today to direct the Department of Labor to revise its wage-payment regulations so that more workers will receive overtime compensation. 

Currently, the Fair Labor Standards Act provides an overtime exemption for categories of salaried employees who receive at least $455 a week.  President Obama intends to increase the weekly $455 salary threshold so that employers must pay affected employees a higher salary, cut their hours, or pay them overtime for work in excess of 40 hours a week.

Employers who hold their breath and declare an employment position as “exempt” from the Fair Labor Standards Act’s overtime previsions − all the while knowing that the exempt v. non-exempt question is a close call − should take a simple step to save themselves substantial damages should a court later rule the position non-exempt.

When entering into an employment arrangement with the employee, the employer should obtain the employee’s acknowledgement in writing that the employee’s weekly hours may fluctuate, and that each weekly portion of the employee’s annual salary will constitute payment for all hours worked during that week.

In a recent decision, a federal district court judge held that Abbott Laboratories, Inc.’s pharmaceutical sales representatives do not qualify for either the outside sales or administrative exemptions of the Fair Labor Standards Act (“FLSA”).  Under the FLSA, employers are required to pay overtime for hours worked over 40 in a week, unless an employee qualifies for an exemption under the Act. While the FLSA contains many such exemptions, the most commonly used exemptions are the executive, outside sales, and administrative exemptions.  Each exemption has specific requirements that must be met.