Tag Archives: fair labor standards act

Successor Liability does not cover federal claims

Teed v. Thomas & Betts Power Solutions, LLC (7th Cir. 2013) held that  a buyer of a company’s assets can’t rely on state law to keep  a seller’s violations of the Fair Labor Standards Act (FLSA) from transferring to the buyer of the Seller company’s assets.  This standard has been previously applied to the LMRA, NLRA, Title VII, ADEA, and FMLA.

The Seventh Circuit explained that federal labor law claims are governed by federal common law, not state law.  Further, the court explained that employees do not have the power to stop an owner from selling the company.  Therefore, the buyer (successor) is stuck with the seller’s (prior owner) liability regardless of what the contract states.

To determine whether successor liability will apply, the Seventh Circuit considered the following multi-part balancing test:

  1. Whether the successor had notice of the pending law suit;
  2. Whether the predecessor would have been able to provide the relief sought in the lawsuit before the sale;
  3. Whether the predecessor could have provided relief after the sale;
  4. Whether the successor can provide the relief sought in the suit (if not successor liability is a phantom); and
  5. Whether there is continuity between the operations and work force of the predecessor and the successor – which favors successor liability because nothing really has changed.

via Buyer Beware of Successor Liability For FLSA Claims | Sands Anderson PC – JDSupra.

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Supreme Court and collective action dismissals

The Supreme Court has recently decided a collective action case that affects how the litigation process can be cut promptly by defendants.  In summary of the details below, a plaintiff loses its interest in a collective action when an offer completely satisfies the plaintiff’s claim.  Further, if the plaintiff does not move for certification, even though the lawsuit had already started, the plaintiff’s case ends if the claim is no longer alive.

What this might imply is that plaintiffs in a collective action would need to move promptly when seeking certification.  The question, however, is: would you have enough supporting evidence by then?

In Genesis Healthcare Corp. v. Symczyk, 11-1059 (2013), the Supreme Court held that a collective action (FLSA) is moot when the named plaintiff has no continuing personal interest in the outcome of the lawsuit and no motion for conditional certification has been filed.

The District Court, finding that no other individuals had joined her suit and the Rule 68 offer that was ignored fully satisfied her claim, dismissed the lawsuit for lack of subject matter jurisdiction.  The Third Circuit Court of Appeals dismissed.  However, the Supreme Court agreed with the District Court, and thus reversed the Court of Appeals’ opinion.

The Supreme Court explained that Sosna v. Iowa, 419 US 393 (1975) and United States Parole Comm’n v. Geraghty, 445 US 388 (1980), held that a class action that was erroneously denied relates back to the time of the erroneous denial — as long as the named plaintiff’s claim remains live at the time of the denial of the class certification.

The Supreme Court, here, found that the named plaintiff had not moved for conditional certification and her claim became moot.  Consequently, the relate back provision did not apply in her case.

As to the Rule 68 offer, the Supreme Court held that the purposes of a collective action would not be frustrated by the offer.  The plaintiff alleged that the Rule 68 had the effect to “pick off” the named plaintiffs before the collection action’s process had run its course.  The Supreme Court explained that in Deposit Guaranty Nat. Bank v. Roper, 445 US 326 (1980), when the Rule 68 offer did not provide complete relief, the named plaintiffs could appeal because they retained an ongoing, personal economic stake in the lawsuit.

Here, however, the named plaintiff conceded that the Rule 68 offer offered complete relief, and plaintiff asserted no continuing interest in shifting attorney’s fees and costs.

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Filed under Appellate, courts, employment, legal decision, rules, wage

Donning and Doffing: paying for changing “work clothes”?

The U.S. Supreme Court agreed Tuesday to decide the Donning and Doffing issue as, how does Section 203(o) of the Fair Labor Standards Act (“FLSA”) define “changing clothes.”

In Sandifer v. U.S. Steel, a class of 800 members filed a collective action against U.S. Steel Corp.  The issue on the 7th Circuit Court was whether workers deserved overtime pay for the time spent changing into work clothes and walking from locker rooms to their work site.

The FLSA ordinarily requires that workers be paid at least the federal minimum wage for all hours worked, and time and a half for hours worked over 40 hours in a week.  However, Section 203(o) provides that any time spent changing “clothes” at the beginning or end of each workday may be excluded from working time by the express terms of, or custom or practice under, a bona fide collective bargaining agreement.  In Sandifer, the collective bargaining agreement did not require compensation for changing time.

In this collective action, the class argued that Section 203(o) exclusion was inapplicable because their work attire did not constitute “clothes,” but rather “safety equipment.”  The alleged work clothes in this case included: flame-retardant pants and jacket, work gloves, metatarsal boots, hard hats, safety glasses, ear plugs, and a “snood” (a hood that covers the top of the head, the chin, and the neck).

The district court held that the FLSA did not require compensation for clothes-changing time.  The 7th Circuit Court of Appeals affirmed.  The 7th Circuit explained that the articles seems to be clothing.  The 7th Circuit stated that the articles of clothing were both, clothing and personal protective equipment,

Protection – against sun, cold, wind, blisters, stains, insect bites, and being spotted by animals that one is hunting – is a common function of clothing, and an especially common function of work clothes worn by factory workers.  It would be absurd to exclude all work clothes that have a protective function… and thus limit the exclusion largely to actors’ costumes and waiters’ and doormen’s uniforms.  Remember that the section covers not only clothes-changing time but also washing-up time, and workers who wear work clothes for self-protection in a dangerous or noxious work environment are far more likely to require significant time for washing up after work than a waiter.”

(emphasis added).

In addition, the 7th Circuit relied heavily on the fact that the collective bargaining agreement did not imply that workers were to be compensated for the time spent changing into work clothes, and washing up and changing back.

via Courthouse News Service.

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Misclassification of workers and the DOL’s take on it

Labor Employment Perspectives reports on a possible change that the Department of Labor (“DOL”) regarding classification of workers.

DOL suggests that it may push forward changes to the record keeping requirements under the Fair Labor Standards Act (“FLSA”) regulations.  These changes will bring to the forefront issues relating to the misclassification of workers as independent workers when they are, in fact, employees.

On January 11, 2013, the DOL requested comments on a public survey designed to look at worker classification and determine the workers’ knowledge and understanding of employment laws and rules regarding basic laws and misclassification.

The DOL states,

The purpose of this study is to design and administer a new survey to collect information about employment experiences and workers’ knowledge of basic employment laws and rules so as to better understand employees’ experience with worker misclassification…..

The data collection effort with this group will gather information about workers’ employment and pay arrangements and will measure workers’ knowledge about their current job classification, and their knowledge about the rights and benefits associated with their job status.

As a backdrop, in 2010, DOL commissioned a study, which found that 10% to 30% of audited firms for state unemployment insurance had one or more of its employees misclassified as independent contractors.  In the fall of 2010, the DOL proposed a change to the regulations regarding record keeping designed to “enhance the transparency and disclosure to workers of their status as the employer’s employee or some other status, such as an independent contractor…”

In other words, the regulations, if passed as suggested in 2010, would require employers to inform workers of whether they are (1) employees, (2) independent contractors, or (3) other status.  Currently, the law does not require this.

Given their renewed interest, as evidenced by the public survey focused on worker classification, FMLA regulations may change.

 

via Right-to-Know Regulations May Move Back to the Forefront; Time to Check If You Have Misclassified Your Workers! | Labor & Employment Law Perspectives.

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