Natalie Dellinger sued Science Applications International Corporation for retaliation under the FLSA.  She alleged that the company refused to hire her after it learned that she had sued her former employer, CACI, Inc., under the FLSA’s wage and overtime provisions.  Dellinger charged that Science Applications’s motive for withdrawing its previous job offer was retaliation for her exercising her protected right to file an FLSA lawsuit. 

The district court dismissed Dellinger’s suit, finding that the FLSA’s anti-retaliation provision protects only employees and not prospective employees.  The Fourth Circuit agreed, stating the following:

Although [Dellinger] was an applicant for employment with Science Applications, and her application had been approved on a contingent basis, she never began work.  Section 203(g) provides that “employ” means “suffer or permit to work.”  Therefore an applicant who never began or performed any work could not, by the language of the FLSA, be an “employee.” 

To bolster her case, Dellinger argued that the FLSA makes it unlawful for “any person” to retaliate against any employee, and that because Science Applications is a “person,” it is prohibited from retaliating.  The Fourth Circuit disagreed – an employee may only sue employers for retaliation as explicitly defined in Section 216(b) of the FLSA.  The provision addressing “persons” in the FLSA prohibits other acts separate from retaliation – transporting goods, for example, produced by employees who are paid in violation of the Act. 

The Court also noted that the FLSA was intended primarily as a minimum wage and maximum hour law, with the anti-retaliation provision as a subpart of that broad paradigm – not as a free-standing protection.  The employment relationship is inherent to the purpose of the entire law and its substantive provisions. 

Dellinger finally urged the Court to extend the FLSA’s definition of employee to protect job applicants, relying on other statutes that protect potential employees – the Energy Reorganization Act, the National Labor Relations Act, the Occupational Safety and Health Act, and the Pipeline Safety Improvement Act.  The Court differentiated the terms and definitions in the FLSA from the named statutes, and it concluded that the text and purpose of the FLSA tie closely to the employment relationship, not authorizing prospective employees to bring civil action against prospective employers.   The dissent, however, would have adopted Dellinger’s position.

A complete copy of the opinion can be found here.  Dellinger’s attorney has indicated that a petition for rehearing en banc will be filed with the 4th Circuit.

The lead plaintiff was a former store manager for Family Dollar, a national chain of over 6,800 stores in 44 states.  Plaintiff, like all other store managers, was classified by Family Dollar as an executive exempt from FLSA overtime pay requirements.  Plaintiff worked 50-65 hours per week and was paid a fixed salary plus a bonus which was directly related to the profitability of the store.  Each store manager supervised at least one hourly assistant store manager and multiple hourly clerks.  Plaintiff was permitted to set her own hours and was authorized to make decisions affecting the profitability of the store, subject to company policy.  Plaintiff’s duties included training, supervising, disciplining, scheduling and evaluating employees, and overseeing the store’s operations, including ordering inventory, customer relations, cash handling and budgeting.  Plaintiff was supervised by a district manager who visited the store once every two or three weeks.  The district manager followed plaintiff’s personnel recommendations 95% of the time.  Plaintiff claimed that she spent 99% of her work time performing non-executive tasks, such as stocking shelves, running cash registers, and cleaning.  Plaintiff explained that her job required that she “multi-task,” such that while she performed non-managerial task, she was also functioning as a manager.  Plaintiff argued that she was misclassified as exempt because she spent the vast majority of her time on non-executive tasks and therefore should be paid on an hourly basis and awarded unpaid overtime.  At summary judgment, the district court concluded that plaintiff was properly classified as an exempt employee and granted Family Dollar’s motion for summary judgment.  

The Fourth Circuit affirmed, holding that even though plaintiff was required to perform the nonexempt tasks needed for the successful operation of the store, she remained the highest level employee at the store and her income depended on the success of her performance and the profits at the store.  The Fourth Circuit noted that FLSA recognizes the nature of retail business and exempts retail executives from the requirement that the majority of their hours be spent on executive functions.  The Court held that although plaintiff claims that non-managerial task occupied most of her time, she was also concurrently managing the store and the person responsible for running the store.  Additionally, plaintiff was relatively free from supervision and there was typically no one else at the site to direct the store’s operations.  Because plaintiff’s claim was properly dismissed, the district court did not err in declining to permit plaintiff to pursue her claim on behalf of other similarly situated employees.             

For a copy of the full opinion of the Fourth Circuit, click here.

29 U.S.C. §215(a)(3), the FLSA’s anti-retaliation statute, prohibits employers from discharging “any employee because such employee has filed any complaint” alleging violation of the FLSA.  In reversing the decision of the Seventh Circuit Court of Appeals which concluded that the anti-retaliation provision did protect employees who made only oral complaints, the Supreme Court held that the scope of statutory term “filed any complaint” includes oral and written complaints.  The Supreme Court reasoned that even if the term “filed” was interpreted to indicate that only written complaints should be included within the statute’s purview, the provision’s use of the terms “any complaint” suggested a broad interpretation that includes oral complaints.  Additionally, the Supreme Court concluded that a narrow interpretation of the provision would undermine the FLSA’s basic objectives and enforcement needs.   Moreover, the Supreme Court noted that the Secretary of Labor and the Equal Employment Opportunity Commission have consistently held the view that “filed any complaint” covers both oral and written complaints.

To read the United State Supreme Court’s entire opinion, click here.

Additional blog posts and articles regarding the holding in Kasten can be found here, here, here, here, here and here.  Several commentators point out that this marks a run of seven consecutive decisions in favor of retaliation plaintiffs by the Supreme Court since 2005.

During these hitches, plaintiffs were paid for 12 hours a day, regardless of whether they performed any work during their shifts.  During the other 12 hours of each day, plaintiffs slept aboard the ship and were required to remain on “stand by” and within 30-45 minutes of the ship at all times.  Plaintiffs filed a complaint against defendants, alleging defendants failed to properly calculate overtime wages for the seventh consecutive day worked and for the 12 hours each day of a hitch that plaintiffs were on call.  The trial court granted summary judgment in favor of defendants, holding that defendants’ compensation practices complied with the requirements of the California Labor Code.

The Court of Appeal reversed the judgment in favor of defendants and held defendants failed to establish that they had correctly compensated plaintiffs for all hours worked.  First, the Court of Appeals held that defendants impermissibly designated the workweek in such a way as to circumvent the statutory requirement to pay overtime rates for the seventh consecutive day.  The Court of Appeal further held that the restrictions placed on plaintiffs during their on-call hours subjected plaintiffs to defendants’ control for the full 14-day hitch, and therefore, the on-call hours constitute time worked.  However, the Court of Appeal found that plaintiffs were not entitled to compensation for 24 hours per workday.  Because California law authorizes employers to enter into an agreement with their 24-hour employees to exclude eight hours of sleep time each day and the undisputed evidence established that the parties had such an agreement, the Court of Appeal concluded that plaintiffs were entitled to compensation for an additional four hours — not 12 hours – for each day worked.    

To read the Court of Appeal’s decision, click here. 

Contributed by Laura B. Chaimowitz

How not to fire an employee for theft.  (Workplace Prof Blog)

Diabetic’s disability lawsuit against restaurant is hard to swallow.  (LA Times)

Should I fight or settle?  (Connecticut Employment Law Blog)

New OSHA PPE (personal protective equipment) guidance.  (Manpower Employment Law Blawg)

Weekly calls to employee interfere with FMLA leave.  (FMLA Blog)  (Additional commentary here.)

Who is a successor for FLSA purposes?  (Connecticut Employment Law Blog)

Discrimination complaints on the rise in Virginia.  The story can be found here.

USCIS reaches FY 2011 H1-B cap.  Their press release can be found here.

Updating 20th Century laws for the 21st Century.  The Ohio Employer’s Law Blog has some comments here (and cross-links to the Connecticut Employment Law Blog).

4th Circuit to hear oral argument on scope of FLSA anti-retaliation provision.  Virginia Qui Tam Law.com has the story here.

Facebook case settles at NLRB.  Workplace Prof Blog has the story here.  Connecticut Employment Law Blog has commentary here.  Ohio Employer’s Law Blog has commentary here.

More unemployment taxes on the table.  The Wall Street Journal has the story here.

The plaintiff, Teresa Hale, was a former employee of Dolgencorp, Inc., which operates Dollar General stores across the country.  During the relevant time, Hale was employed as a store manager and earned a salary.  Hale claimed that she did not fall within the executive exemption for overtime pay under the FLSA and was therefore entitled to overtime compensation.  Under the FLSA, employers are required to pay time and a half to employees who work over forty hours a week, unless the employee falls under an exemption.  The executive exemption under the FLSA applies to employees who qualify as “executive or managers.”  The FLSA regulations state a test for determining whether an employee is exempt:  (1) the employee is compensated on a salary basis at a rate of no less than $250 per week; (2) their primary duty is management of the enterprise; and (3) the work includes customary and regular direction of the work of two or more employees. 

Here, the issue involved was whether the employee’s primary duty was management of the enterprise.  Hale testified that she spent about ten percent of her time in a given week performing management duties, and the remainder was spent on performing menial labor, such as cleaning, stocking, and working the register.  In its analysis, the court first laid out the factors used in determining what constitutes a “primary duty”:  (1) the amount of time spent performing managerial duties; (2) the relative importance of managerial duties compared to other duties; (3) the frequency with which the employee exercises discretion; (4) the relative freedom from supervision; and (5) the relationship between the employee’s salary and the wages paid to other employees for nonexempt work performed by the supervisor. 

With respect to the first factor, the court held that a reasonable jury could conclude that Hale spent very little time actually managing the store based on her testimony that she spent the majority of her time performing menial tasks.  With respect to the second factor, Dollar General argued that it principally valued Hale’s management abilities.  The court found, however, that a reasonable jury could conclude that Dollar General mainly valued Hale’s ability to perform store clerk duties (such as stocking shelves and working the register), as well as her ability to promptly report any problems to her supervisor, who would then advise her on how to proceed.  As to the third factor, the frequency with which Hale exercised discretion, the court found that even though Hale was permitted to engage in the hiring, training, and discipline of employees, as well as in setting work schedules, Dollar General had rules in place that limited Hale’s ability to truly exercise discretion.  For example, the court stated that although Hale created the work schedules, she had no control over the amount of labor hours allotted to her store, and that she did not have authority to discipline or terminate employees without the district manager’s approval.  With respect to the fourth factor, the court noted that while the district manager spent very little time actually supervising Hale’s store, he left frequent voicemails for Hale with specific instructions regarding the operation of the store.  Finally, the court found that Hale’s salary, when converted to an hourly rate, was essentially the same as what a clerk earned.  The court concluded that based on application of the five-factor test, a reasonable jury could determine that Hale’s primary duty was not management, and therefore denied the defendant’s motion for summary judgment.

The plaintiff had brought unpaid wage and overtime claims against the defendants in the amount of $50,000.  The defendants made an offer of judgment which the plaintiff accepted, and the court entered judgment against the defendants in the amount of $50,000, plus reasonable attorneys’ fees and costs incurred through the date of the judgment.  The plaintiff originally sought attorneys’ fees and costs in the amount of $34,607.13.  The plaintiff subsequently moved to reduce the fees by ten percent, which represented the amount of discovery sanctions imposed upon the defendants.  The defendants opposed the fee petition on the grounds that certain hours expended were related to the prosecution of the case against other defendants. 

The court began its analysis by laying out the factors used to determine what constitutes “reasonable” attorneys’ fees in the Fourth Circuit:  (1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney’s opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorney’s fees awards in similar cases.

The court stated that the most critical factor in determining the reasonableness of an award is the degree of success obtained by the plaintiff, and that the award could be reduced to account for that amount of success.  Here, the court found that the majority of the factors weighed in favor of the plaintiff, noting that with respect to the customary fee charged for similar work, the rate charged by the plaintiff’s counsel was “reasonable or even low” for an attorney with that amount of expertise and experience.  Further, the court found that the rates were at or below the rates set forth in the Laffey Matrix used in Washington, D.C.  Similarly, the court found that the hours expended were reasonable and perhaps even low given the nature of the tasks involved.

The scope of the letter is as follows:

Section 3(o) of the Fair Labor Standards Act (FLSA) provides that time spent “changing clothes or washing at the beginning or end of each workday” is excluded from compensable time under the FLSA if the time is excluded from compensable time pursuant to “the express terms or by custom or practice” under a collective bargaining agreement. 29 U.S.C. § 203(o). After a careful analysis of the statutory provision and a thorough review of the legislative history and case law, the Administrator is issuing this interpretation of the term “clothes” in § 203(o), and of whether clothes changing covered by § 203(o) is a principal activity, to provide needed guidance on these important and frequently litigated issues.

Between 2008 and 2009, the plaintiff, Natalie Dellinger, was employed as an Administrative Assistant for CACI, Inc.  In July 2009, Dellinger filed an FLSA claim against CACI alleging minimum wage and overtime violations.  In the meantime, Dellinger applied for an administrative position with the defendant, SAIC.  SAIC offered her a position in August 2009.  SAIC’s offer was contingent upon verification of Dellinger’s security clearance as well as submission of a government form requesting, among other things, disclosure of any court actions to which Dellinger was a party.  The same day that Dellinger delivered the completed form to SAIC, the company withdrew their offer of employment. 

Dellinger brought suit against SAIC claiming retaliation under the FLSA.  SAIC filed a motion to dismiss, arguing that the complaint did not state a claim for retaliation because Dellinger was not an “employee” within the meaning of the statute.  Applying basic principles of statutory construction, the court found that a job applicant was not considered an “employee” based on a plain reading of the statute.  The FLSA defines “employee” as “any individual employed by an employer.”  The term “employ” is further defined as “to suffer or permit to work.”  The court pointed out that Dellinger was never permitted to work for SAIC since her offer of employment was withdraw.  The court therefore granted SAIC’s motion to dismiss, stating that “[w]ithout reading beyond the plain language of the statute, a job applicant cannot be considered an ‘employee.’ ”

The campaign focuses on providing information to the country’s primarily low-wage workers regarding things such as employee workplace rights and procedures for filing complaints with the Wage and Hour Division.  In furtherance of its goal, the Department launched the “We Can Help” website, as well as created bilingual public service announcements and a toll-free hotline to aid workers who believe they were denied proper pay.  The website emphasizes that the Department will assist all workers in obtaining compensation owed under the law regardless of their immigration status.  Secretary Solis stated that the Department has increased its field investigator workforce by one-third to assist in this effort.

DOL press release:  http://www.dol.gov/opa/media/press/whd/WHD20100411.htm

We Can Help website:  http://www.dol.gov/wecanhelp

The letters will consist of general interpretations applicable to everyone affected by the statute or regulation at issue.  Any opinion letter requests received by the Department will be answered by providing information regarding statutes and case law relevant to the request instead of a fact-specific analysis. 

The first Interpretation letter issued by the Department, found here, concerns an interpretation of the Administrative Exemption under the Fair Labor Standards Act.  The letter interprets the exemption as not applicable to employees who perform the duties of a mortgage loan officer because such employees are more closely involved in sales than in performing a service for the company.  The letter also states that the exemption applies to employees whose primary duty is “directly related to the management or general business operations of the employer’s customers,” but that mortgage loan officers do not fall under this category.

The DOL index for FLSA Interpretation Letters can be found here.

 Source:  http://www.dol.gov/WHD/opinion/opinion.htm#AdmIntprt 

Law.com reports here that a class action lawsuit has been filed against Amazon relating to their alleged practice of rounding employee time in a manner unfavorable to their employees.

Law.com also reports here that a UPS Supply Chain Solutions overtime suit in California settles for $12.8 million.  The suit had alleged misclassification of drivers as independent contractors.

New York Increases Penalties for Employers Who Retaliate –  New York recently amended its labor laws to increase the penalties for retaliating against employees who report or complain about labor law violations.  Under the new law, which went into effect in November, the minimum civil penalty for an employer who engages in retaliation increased from $200 to $1000.  The maximum penalty increased from $2000 to $10,000.  Employers may also be liable for lost compensation.  The law gives the State Department of Labor the power to sue for unpaid wages and liquidated damages on behalf of employees who are fired for reporting violations.  The law also makes officers and agents of limited liability companies and partnerships liable for retaliation.  Finally, and perhaps most significantly, the law shifts the burden to the employer to prove that it had did not act willfully when an employee seeks liquidated damages for unpaid wages.  A copy of the new law can be found here.

Massachusetts High Court Increases Damages for Misclassified Workers –  In Somers v. CAI, the Massachusetts Supreme Judicial Court held that employees who have been misclassified as independent contractors are entitled to receive wages and benefits at the rate they were earning as independent contractors.  In this case, the plaintiff had been hired as an independent contractor for CAI.  After his contract ended, he sued the company alleging he had been misclassified, among other things.  The lower court granted summary judgment in CAI’s favor, and the plaintiff appealed.  On appeal, CAI argued that even if Somers had been misclassified, he did not suffer any damages because he earned more as a contractor than if he had been an employee.  The supreme court rejected this argument, stating that Somers was CAI’s employee (unless CAI could prove at trial that he was an independent contractor), and so the hourly wage he was earning as a contractor was actually his wage as an employee.  Therefore, that same wage must be used to calculate any overtime, holiday/vacation pay, and other benefits Somers would have received if he had been properly classified.  The court also held that if Somers prevailed at trial, he would be entitled to treble damages for lost wages and other benefits.  A copy of the court’s opinion can be found here.

MSNBC — “Recession adds fuel to workplace gossip:  The recession not only ushered in unprecedented job cuts and economic pain but also seems to have opened the door to more whispers around the water cooler.”

(Hat tip to Fair Labor Standards Act Law Blog.  As they point out, the DOL has a chart of state minimum wages here.)