U.S. Department of Labor Announces New “PAID” Program for Settling FLSA Claims

On March 6, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) announced a new pilot program through which employers may settle potential overtime and minimum wage claims under the FLSA by paying back pay owed to the affected employee(s), but without paying civil penalties or liquidated damages.  The Payroll Audit Independent Determination (PAID) program will be available for six months, after which the Department will evaluate the viability of the program.  This program is purely voluntary, both for employers, in that they would need to self-disclose the violation(s) to the WHD, and employees, who may choose to accept the back pay being offered by the employer as full settlement of the potential claim, or decline the offer and file suit, thus preserving the right to recover liquidated damages if successful.  If the employee chooses to accept the back pay, and thus settle the potential claim by signing a release of that claim, the WHD will only approve a release if it is tailored to the identified violations and the time period covered by the back wages payment.  Employers are not eligible for the program if they are already under investigation by the WHD, involved in litigation or arbitration regarding the particular claim, or the employee has already communicated an interest in litigating or settling the issue.  Claims that could be resolved through this program include misclassification of employees as exempt from overtime or failure to pay for “off the clock” work.

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The Department of Labor Reinstates Seventeen Bush Era Opinion Letters

Earlier this year, the United States Department of Labor (“DOL”) reinstated seventeen George W. Bush Era opinion letters which were issued in January 2009, but later withdrawn by the Obama Administration. Opinion letters are official guidance from the DOL’s Wage and Hour Division that provide employers with detailed responses to fact-specific questions pertaining to the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Davis-Bacon Act (DBA).

In 2010, the DOL stopped issuing opinion letters and instead began issuing “administrative interpretations,” which offered a more general interpretation of the law rather than a response to specific questions posed by employers or employees.

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Federal Court Dramatically Reduces Attorney-Fee Award to Plaintiffs in FLSA Collective Action Against Chipotle

The United States District Court for the District of Minnesota has dramatically cut an attorney-fee request in a wage-and-hour collective action against Chipotle Mexican Grill Inc. from $3.2 million to $600,000, finding the original amount “excessive” in light of the relatively small $62,000 recovery and straightforward nature of the case. Harris et al. v. Chipotle Mexican Grill Inc., No. 13-CV-1719 (SRN/SER), 2018 WL 617972 (D. Minn. Jan. 29, 2018).

The 81 percent fee reduction marks the end of an almost five-year saga, which began in 2013 as a nationwide putative collective action by employees Marcus Harris and Julius Caldwell. Through the action, Harris and other named plaintiffs, who were employed as hourly workers at Chipotle’s Crystal, Minnesota, restaurant sought unpaid straight time and overtime wages based on allegations that Chipotle forced its non-exempt employees to perform off-the-clock work, pursuant to the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, and the Minnesota Fair Labor Standards Act, Minn. Stat. §§ 177.21-177.35.

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Individual Liability for California Wage-and-Hour Violations: Developments on California Authority in 2017

Can employees sue individuals for wage-and-hour violations? That is the question numerous trial courts have been asked since the enactment of California Labor Code section 558.1 (“Section 558.1”) in 2016. Unfortunately, no binding authority on the question exists yet, but several trial courts have concluded that employees can.

Under Section 558.1(a), “[a]ny employer or other person acting on behalf of an employer who violates, or causes to be violated,” several labor code provisions, “may be held liable as the employer for such violation.” The term “other person acting on behalf of an employer” means any person who is an owner, director, officer, or managing agent of the employer. Lab. Code § 558.1(b). Generally speaking, managing agents are corporate employees who exercise substantial independent authority and judgment so that their decisions ultimately determine corporate policy; in other words, “managing agents” aren’t necessarily just company executives.

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Department of Labor to Begin Issuing Opinion Letters, Again

Secretary of Labor, Alexander Acosta, recently announced that the Department of Labor (DOL) will resume issuing opinion letters to provide employers with direction on compliance issues. Opinion letters are an official response from the DOL’s Wage and Hour Division that provide employers with detailed explanations regarding how certain laws apply to the specific facts.  Opinions are available to an employer for issues arising under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Davis-Bacon Act (DBA).  In a DOL press release, Secretary Acosta stated that issuing opinion letters will help employers and employees develop a better understanding of the laws and allow employers to “concentrate on doing what they do best:  growing their businesses and creating jobs.”
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Preparing for the Future of the Overtime Eligibility Rule

One of the most significant wage and hour actions of the Obama administration—promulgating a new rule on overtime eligibility—remains frozen in legal limbo as the Trump administration decides whether to repeal and replace it or propose an alternative solution. With such uncertainty, what should employers do to ensure they are in compliance when the Trump administration finally takes action?

First, employers need to understand why the new overtime rule is not in effect. A federal district judge in Texas stayed the rule’s implementation on November 22, 2016, just nine days before it would have become effective nationwide. The judge held that the Department of Labor exceeded its regulatory authority by establishing a salary threshold under which employees were automatically overtime eligible regardless of their job duties. The Department of Justice appealed that decision, and the Texas AFL-CIO filed a pending motion to intervene in the event the Trump administration decides not to challenge the judge’s decision in the appeal’s court. After obtaining two filing extensions, the DOJ has until May 1 to file a brief stating its position on the appeal.

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