Category Archives: Wage and Overtime Pay

DOL Issues New Guidance for Hospitality Employers on Tipped Employees

Earlier this month, the U.S. Department of Labor (“DOL”) issued Opinion Letter FLSA2018-27 providing updated guidance to employers on how to pay tipped employees.  The new Opinion Letter abandoned the previous 80/20 tip credit rule. The DOL’s new guidance provides no limit on the amount of time a tipped employee spends on related non-tip-producing duties so long as such duties are “performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.”

NLRB Announces Intent to Change Joint-Employer Test

On Thursday, September 13, 2018, the National Labor Relations Board (NLRB) announced its intent to change the standard to determine joint-employment. In a September 13, 2018, news release, the Board stated that it will publish a proposed rule clarifying and restricting the standard to determine when two entities are considered a single “joint-employer” over a group of employees.  The proposed changes would limit joint-employment to employers that possess and exercise “substantial, direct and immediate control over the essential terms and conditions of employment” of another employer’s employees.  The proposed changes would also require that an employer must have exercised its …

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States Continue To Pass Equal Pay Legislation

While the Federal Equal Pay Act, which mandates employers to pay men and women the same pay for the same work, has been the law for 55 years, salary surveys continue to show that women are paid less than men.  In an effort to address this pay gap, states around the country are passing their own legislation.  Some of the states have enacted similar provisions, while a few have enacted unique provisions. Ban On Salary History Inquiries Studies have shown that one factor contributing to ongoing pay discrepancies is that an employee’s starting salary with an employer is often based …

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So You Think You’ve Got Independent Contractors? Well, Think Again

Virginia law requires most employers to carry workers’ compensation insurance in order to provide specific benefits to workers injured during the course of their work and to provide employers with protection from civil suits for those work-related injuries. Generally, an employer with more than three employees is required to carry workers’ compensation coverage. However, in the last decade especially, employers have more frequently misclassified employees as independent contractors in an effort to keep the number of employees below three and to avoid purchasing workers’ compensation coverage.

The Tip Income Protection Act — Changes to Tip Pooling

The Tip Income Protection Act of 2018 (“the Act”) was signed into law on March 23, 2018 as part of the omnibus spending bill. The Act, buried in the 2,323 pages of the bill, amends the Fair Labor Standards Act (FLSA) and rolls back the Department of Labor’s 2011 regulation on tip pools. The Act allows for employees who do not customarily receive tips to participate in tip pools, where the employer does not take a tip credit. The “employees” referred to in this act also include the back of the house employees like busboys, chefs, line cooks, and janitors. …

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SCOTUS Update: DOL Rule Reversal to Impact “Narrowly Construed” FLSA Class Exemptions

In a 5-4 decision, the Supreme Court ruled on Monday that automobile service advisors are exempt from the overtime requirements of the Fair Labor Standards Act. While the decision would appear to apply only to a narrow class of employers (automobile dealers), the majority opinion rejected the principle that exemptions to the FLSA should be construed narrowly, which has the potential for much broader impact. Encino Motorcars v Navarro involved an exemption under the FLSA which provides that that statute’s overtime-pay requirement does not apply to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles . . …

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DOL Announces PAID – the Pros and Cons of the Wage and Hour Self-Audit

Double (liquidated) damages and attorneys’ fees are often the tail that wags the settlement dog in government audits and wage and hour litigation.  Employers now have another strategy for dealing with unintentional wage and hour pay errors – but only on a trial basis. On March 6, 2018, the United States Department of Labor Wage and Hour Division (WHD) announced a national pilot program for employer self-audit of wage and hour violations under the Fair Labor Standards Act (FLSA). The FLSA is the federal statute that governs payment of minimum wage and overtime pay for nonexempt employees.  The program, aptly …

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Cash Payments Made To Employees In Lieu Of Health Benefits Must Be Factored Into Overtime Pay Under The FLSA

In Flores v. City of San Gabriel, the Ninth Circuit held that cash payments made by the City to its employees in lieu of healthcare benefits must be factored into the base pay that is used to calculate overtime pay (1.5 times base pay). The City provided a “Flexible Benefits Plan” to its employees, under which it gave employees a designated monetary amount to aid in the purchase of healthcare (vision, dental, and medical) benefits. Employees had the choice to obtain medical benefits through the City or receive cash instead. The cash was added to the employees’ paychecks as a …

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DOL Adopts “Primary Beneficiary” Test for Interns

The U.S. Department of Labor announced Friday that it was abandoning the six-factor test it had previously used for determining whether interns are employees for purposes of the Fair Labor Standards Act, and that it was now adopting the “primary beneficiary” test favored by several U.S. Courts of Appeals. As we discussed recently, the Second Circuit in Wang v. The Hearst Corporation, No. 16‐3302 (2d Cir. Dec. 8, 2017), and the Ninth Circuit in Benjamin v. B&H Education, No. 15-17147 (9th Cir. Dec. 19, 2017), had recently rejected the DOL’s six-factor test in favor of the “primary beneficiary” test, which …

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New Guidance on Interns v. Employees

The test for determining whether unpaid interns at a for-profit employer are employees under the Fair Labor Standards Act, and thus entitled to compensation for services provided, has been the subject of considerable litigation over the past few years. Employers now have recent guidance from two federal appellate courts to use in analyzing their intern programs. In Glatt v. Fox Searchlight Pictures, Inc., Nos. 13‐4478; 13‐4481 (2d Cir. Jan. 25, 2016), the Second Circuit (which covers district courts in Connecticut, New York and Vermont) explained that, in determining whether an individual is an intern or employee, the salient question is …

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