Wage and hour demands emerged from the 2021 COVID-19 pandemic

New wage and hour demands emerged in 2021, resulting from employers’ efforts to respond to the COVID-19 pandemic. The coming year could also bring a slight pandemic-related increase in the more common types of wage and hour claims that make up the lion’s share of class and job class actions. Another factor likely to lead to an increase in class litigation is the Biden administration’s reversal of Trump-era rulemaking.

Claims out of clock hours

Lawsuits seeking compensation for activities undertaken by employees before and after shift rest on a variety of factual bases. The COVID-19 pandemic has ushered in new ways of working and potentially new “out-of-hours” scenarios, which could lead to an increase in claims involving both new and familiar fact patterns.

Boot time. In October, the United States Court of Appeals for the Tenth Circuit ruled that call center employees were entitled to compensation for the time they spent booting up their work computers and launching software before to clock in before each shift, believing that these activities were integral and essential for their primary functions. Moreover, the application of de minimis doctrine, the Court of Appeal concluded that the employer had failed to establish that, in practice, it would be administratively impossible to record or estimate the time in question.

The employer urged the appeals court to consider the policy implications of computer startup time compensation “in our modern, digital age, including during the COVID-19 pandemic, when telecommuting is more and more common”. However, the appeals court wrote, “We need not speculate on the application of the FLSA to teleworkers or the broad implications of the pandemic for our digital age. We only have to decide the case submitted to us, which does not concern telework. However, with the dramatic expansion of the virtual work model accelerated by the pandemic, telecommuting claims could soon account for a sizable portion of wages and class hours and out-of-hours class actions.

Security checks. The United States Supreme Court, in its 2014 decision in Integrity Staffing Solutions, Inc. c. Buskruled that post-shift security checks were not an integral part of employees’ primary duties and therefore were do not compensable under the FLSA. The question remains, however, whether this downtime is compensable under state wage and hour laws, especially in states that have not passed the federal Portal-to-Portal Act, which established the FLSA’s “full and indispensable” framework for determining workers’ compensation before and after shift work.

In July, the Pennsylvania Supreme Court ruled that time spent by warehouse workers going through security after clocking in was compensable under Pennsylvania’s minimum wage law. Answering Certified Questions from the Sixth Circuit and accepting as true the factual finding of the Sixth Circuit that the employer required the employees to remain on the premises during this time, the state high court found that the screenings constituted ” hours worked” under Pennsylvania law and there is no statutory de minimis exception. The defendant, an online retail giant, later agreed to pay Nevada workers $13.5 million to settle another case, part of a long-running multidistrict dispute.

In December, the Ninth Circuit asked the Oregon Supreme Court to decide whether time spent onsite waiting and undergoing security checks is compensable under Oregon law. The federal district court found that Oregon had incorporated the Portal-to-Portal law (if not expressly) and entered judgment on the pleadings to the employer in a 24-hour class action lawsuit. , the Ninth Circuit found it unclear whether Oregon had adopted the federal standard and so certified the matter to the state high court.

California continues to be an active forum for security screening class actions. As 2021 drew to a close, a federal court granted preliminary approval to a $29.9 million settlement in a long-running lawsuit involving a 14,000-member class of retail workers. A federal court initially found that time spent waiting to undergo baggage checks was not compensable; however, the Ninth Circuit certified the matter to the California Supreme Court, which ruled in a unanimous decision that mandatory security checks (and waiting time to undergo such a check) were indeed compensable under the California Wage Ordinance No. 7.

COVID-19 screening. Employers in several states are defending class action lawsuits brought by employees seeking payment for pre-shift time spent waiting to have their temperature checked before entering the job site or answer related symptom questionnaires to COVID-19. Like the after-shift security screening cases, these claims — several dozen of which have been filed so far — are based on state wage laws that do not incorporate the Portal-to-Portal law. . And, like all class and class actions, lawsuits come with significant risk of exposure if they survive early termination.

A new administration, a new regulatory environment

Under the Biden administration, the new leadership of the US Department of Labor (DOL) has moved to revoke three Trump-era regulations in 2021.

  • Independent contractor rule. In May, the DOL withdrew its final rule regarding independent contractor status under the FLSA. The rule, which never came into force, would have established the “economic reality” test as the uniform standard for determining whether an individual is in business for himself (an independent contractor) or economically dependent on a putative employer. for work (an employee) . Therefore, court precedents and DOL regulations and guidelines that were in place prior to the issuance of the Final Rule continue to apply.

  • Co-employer rule. In July, the DOL announced it was repealing the joint employer rule issued under the Trump administration, effective September 28. The 2020 rule provided clearer guidance to the business community for determining joint employer status under the FLSA, in the form of a four-factor test. balancing test to determine whether an entity is acting directly or indirectly in the interest of an employer over the employee.

  • Tipping rule. Late in the Trump administration, the DOL issued a final rule eliminating the “80/20” rule, which the DOL and some courts had adopted to assess whether tipped workers were sufficiently engaged in tip-generating tasks to that their employer can take the tip credit against the minimum wage rate. The tipping rule was supposed to go into effect in March 2021, but the Biden DOL delayed its enactment. In October, the DOL reinstated the 80/20 rule and added a new “30 minute” rule. Under the final rule, an employer cannot take tip credit when work directly supporting tips exceeds 20% of the hours worked during the employee’s work week or is performed for a continuous period of more than 30 minutes. . The new rule, which went into effect Dec. 28, also addresses tip sharing and other tipping provisions.

The net result will be greater uncertainty for employers regarding complex legal issues about employee-employer status and the extent to which tipped employees can perform tasks that do not directly generate tips. Confusion breeds litigation and, especially in the context of wages and hours, class action lawsuits.

Other Important Wage and Hour Decisions

Daily allowance for travel expenses. In an FLSA class action lawsuit, the Ninth Circuit ruled that per diems paid by a healthcare staffing agency to “traveling clinicians” were compensation for work rather than reimbursement of expenses. As a result, payment reductions for failing to work full shifts were incorrectly excluded from the employee’s regular rate of pay for the purpose of calculating overtime pay. In its February ruling, the appeals court cited a combination of factors indicating that the payments functioned as compensation for hours worked, including the link between per diem deductions and shifts not worked, regardless of either the reason for the missed time, the system of “banked hours”, the payment of a daily indemnity on a weekly basis, whether or not the expenses were actually incurred on a given day, and the payment of the same amount of indemnity daily to local clinicians and visiting clinicians.

The employer filed a motion for certiorari asking the Supreme Court to consider the question of “[w]In addition, under the FLSA, per diem allowances for travel expenses, which are reduced when the employee does not work during a contracted shift, are excluded from the employee’s “normal rate” in as ‘reasonable payments for traveling expenses…incurred by an employee in furthering the interests of his employer.’ The United States Chamber of Commerce (and several other industry groups) filed supporting briefs urging the Supreme Court to overturn the Ninth Circuit’s decision. However, in December, the Supreme Court denied certiorari.

Bonuses and fluctuating work week. The Eleventh Circuit ruled that an employer’s practice of paying non-exempt salaried employees two types of bonuses (a night shift bonus and vacation pay) in addition to a fixed salary did not prevent it from use the fluctuating workweek method to calculate overtime. The calls

The court thus revived the individual claim of an employee alleging that he had been refused payment of overtime in violation of the LSF. (The lower court had denied conditional certification of a class action, finding that the plaintiff had not established that there were other employees who wished to participate in the lawsuit or that all of the employees who might participate were in the same situation.)

Reviewing the legislative text, the 1942 Supreme Court decision in Overnight Motor Transportation Co. v. Missal, and regulatory guidelines, the Eleventh Circuit flatly rejected the employee’s assertion that all payments to an employee other than overtime pay should be considered part of his or her fixed salary, explaining that “compensation that an employee receives is not the same as the fixed salary; salary is a subset of the employee’s compensation.”

© 2022 Jackson LewisNational Law Review, Volume XII, Number 49