Last week, the Third Circuit issued a precedential decision holding that the federal common law standard for successor liability is applicable to claims brought under the Fair Labor Standards Act.  The plaintiff filed a class and collective action complaint alleging that she was hired as a mortgage underwriter and was not paid overtime in accordance with federal law and the New Jersey Wage and Hour Law.  The district court dismissed plaintiff’s amended complaint, but the Third Circuit vacated the district court’s decision and remanded for further proceedings.

The Third Circuit now applies the same successor liability standard as the Seventh and Ninth Circuits.  Under this standard a court considers the following factors: (1) continuity of operations and work force of the successor and predecessor employers, (2) notice to the successor-employer of its predecessor’s legal obligation, and (3) ability of the predecessor to provide adequate relief directly.  The Court of Appeals also concluded that the complaint adequately pled a claim under the successor liability theory and noted that “we will not fault [plaintiff] for her inability to make specific allegations as to the continuity of ownership at this stage, particularly given her reasonable assertion that the inner working of the privately held corporations at issue remain hidden to her.”

The Third Circuit also held that the complaint adequately alleged that the two corporate defendants were joint employers explaining that “the scenario described by [plaintiff], in which she and virtually all other Security Atlantic employees were abruptly and seamlessly integrated into REMN’s commercial mortgage business while some of those same employees continued to be paid by Security Atlantic, supports [plaintiff’s] claim that the two companies shared authority over hiring and firing practices.”  Finally, the Third Circuit determined that the amended complaint provided enough information to “allow the court to draw the reasonable inference that the [individual] defendants are liable for misconduct alleged.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.


A California federal judge denied JPMorgan’s motion to compel arbitration on an individual basis.  Two former JPMorgan employees filed a class action complaint alleging violations of state and federal labor laws on behalf of JPMorgan appraisers.  As part of their employment, plaintiffs entered into arbitration agreement providing that “Any and all disputes that involve or relate in any way to my employment (or termination of employment) with Washington Mutual shall be submitted to and resolved by final and binding arbitration.”  The agreements, however, did not contain express waivers of class, collective, or representative claims.

The issue before the court was whether the court or the arbitrator decides if plaintiffs can arbitrate on a class, collective, or representative basis.  U.S. District Judge Staton noted that neither side disputed that the claims were subject to arbitration.  The Court found “useful guidance” in the Supreme Court’s plurality opinion in Green Tree Financial Corp. v. Bazzle.  The Judge explained that the “only question, as in Bazzle, is the interpretative one of whether or not the agreements authorize Plaintiffs to pursue their claims on a class, collective, or representative basis.  That question concerns the procedural arbitration mechanisms available to Plaintiffs, and does not fall into the limited scope of this Court’s responsibilities in deciding a motion to compel arbitration.”

Although the Supreme Court has not yet ruled on whether it is up to the court or an arbitrator to decide whether class arbitration is permitted based on a review of an arbitration agreement, the Court found Bazzle to be persuasive and agreed with its determination that “whether certain arbitration agreements authorized class arbitration properly lay in the first instance with an arbitrator, not a court.”  Judge Staton supported her conclusion by pointing to the Third Circuit decision, Vilches v. The Travelers Companies, Inc., which relied on Bazzle and ruled that the availability of class proceedings was a question for the arbitrator.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

A former Rite Aid store manager filed a complaint in the Southern District of New York alleging that Rite Aid failed to pay its store managers overtime in violation of the Fair Labor Standards Act (the “FLSA”) and the New York Labor Law (the “NYLL).  The plaintiff claimed that store managers had to work overtime to perform non-exempt tasks including duties of cashiers and stock handlers.  The plaintiff moved to certify a class of store managers under Rule 23 and Rite Aid moved to decertify the conditionally certified FLSA class.  U.S. District Judge J. Paul Oetken granted the motion for class certification of the state law claims, but only as to liability and not for damages.  The court also refused to decertify the FLSA collective action.

The parties disputed whether the members of the class satisfied the commonality and typicality requirements under Rule 23.  The court concluded that “(1) Plaintiff’s portrayal of SM [store managers] as automatons, who perform rote tasks as explicitly directed by RA [Rite Aid] is inaccurate; and (2) despite their obvious discretion, however most SMs perform a similar mix of duties, and at the relevant level of generality, exercise their discretion in similar ways, supporting a commonality finding.”  The court also noted that “the differences among SMs are marginal and expected, rather than hyper-individualized and unpredictable.”  The court, however, refused to certify the class for damages purposes explaining that “there is no showing from Plaintiffs that the relevant records for SMs even exist, let alone a sufficient explanation of an approach for calculating damages.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

A recent ruling in the United States District Court for the District of Maryland reaffirms a defining characteristic of the collective action.

Potential claimants’ legal rights are preserved unless and until they affirmatively agree to “opt in” to the litigation. They may elect to participate, file an individual lawsuit or do nothing at all.

With class actions, which proceed under Federal Rule of Civil Procedure 23, the situation is reversed. Potential claimants must affirmatively “opt out” of a certified action otherwise their legal rights will be resolved in the litigation.

As such, inaction by potential claimants may result in very different consequences depending on whether the claims are being resolved under the FLSA or Rule 23.

In Vetter v. GEICO General Insurance Company, et al., No. 8:13-cv-00642 (D. Md. Sept. 25, 2013), the court was confronted with a second motion for conditional certification and judicial notice under the FLSA for a group of GEICO Security Investigators who the plaintiffs claimed had been misclassified as exempt and, thus, not owed overtime pay.

Defendants claimed that the plaintiffs were precluded from seeking collective treatment in the latter case because they had previously received notice in a prior case and elected not to participate.

However, the plaintiffs correctly argued that the law is clear that the opt-in provision of FLSA provides for no legal effect on those parties who choose not to participate. Despite the identical nature of the two proceedings, the plaintiffs also argued that a second judicial notice was still appropriate because the prior notice was obviously ineffective to notify potential plaintiffs of their right to opt in to the new case.

The court sided with the plaintiffs and granted the motion for conditional certification and judicial notice.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

On September 17, 2013, the U.S. Department of Labor released its final rule extending federal minimum wage and overtime protections to approximately two million home care workers who care for the disabled, ill, and elderly.  The new rule narrows the companionship exemption under the Fair Labor Standards Act (“FLSA”).  The final rule was announced nearly two years after the Obama administration first proposed the rule and after receiving approximately 26,000 public comments.  The Department of Labor issued the new rule because the home care industry has radically changed and grown since Congress created the companionship exemption.

Since 1974, “domestic service” employees have been covered by the FLSA and have included cooks, housekeepers, maids, and gardeners.  However, there were three exemptions under the FLSA relating to “domestic service” workers: (1) casual babysitters, (2) those providing “companionship services” such as companions for elderly persons or persons with an illness, injury or disability and (3) live-in domestic workers.

The final rule contains significant changes from the prior regulations, including: (1) the tasks that comprise “companionship services” are more clearly defined and (2) exemptions for live-in domestic service employees and companionship services are limited to the family, household, or individual using the services.  The new rule prohibits third party employers, including home care agencies, from claiming live-in or companionship exemptions.  The final rule with become effective on January 1, 2015 in order to give Medicaid programs and families who use these home care workers time to prepare.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The Fifth Circuit held that Signal International will have to pay a class action judgment because the company violated the Worker Adjustment and Retraining Notification Act (the “WARN Act”).  The WARN Act requires that certain employers provide written notice within 60 days in advance of any “mass layoff” at a “single site of employment.”  The Fifth Circuit agreed with the district court’s ruling that Signal International’s two facilities were a single site of employment for purposes of determining whether there had been a mass layoff.  Generally, two locations are considered separate sites, however, this case qualified under the exception for “truly unusual organizational situations” since the employees had been moved to two locations after Hurricane Ike.

From July to September 2009, Signal International laid off 159 employees without providing advance written notice.  Signal International argued that the WARN Act was inapplicable for two reasons.  First, Signal argued that the company’s two facilities were not a single site of employment.  The Fifth Circuit rejected this argument noting that the sites shared employees and used the same security, payroll, and other staff.  The Circuit Court also rejected the argument that the sites had different operational purposes.  The Fifth Circuit explained that “[o]f course it is true that different units within the same operation will have different purposes if one dissects those purposes finely enough. However, what matters in determining whether separate facilities constitute a single site of employment is not the immediate purpose of this or that facility, but rather what ultimate operational purpose is served by the facilities.”

Signal International also argued that the district court chose the wrong date as the “snapshot” date for measuring employment levels to determine whether the layoff was large enough to trigger the WARN Act.  The Fifth Circuit concluded that the district court had “plenty of reasons” to use this date including that the date was based on a specific example from the WARN Act preamble in which the Labor Department embraced the use of the date immediately preceding the first layoff (“Day 1”) and the date was relied on by the district court and parties for over two years.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Used with permission from Microsoft.

To most of us, the 4th of July means a day off from work spent with family and friends, perhaps going to a parade, having a barbeque or watching fireworks. But Independence Day signifies so much more. It not only honors the birthday of our country, but the adoption of the Declaration of Independence which tells us that we are all “created equal.”

Since July 4, 1776, our nation has grown from 2.5 million people to 311.7 million people. Hard to imagine, isn’t it?

So if all 311.7 million of us are all created equal, why isn’t everyone treated equally? Certainly, we can think of many instances in which we have been treated unfairly, or treated someone else unfairly. Corny as it may sound, it is within each of us who are fortunate enough to be living in this country to take steps to ensure that we do our very best to combat discrimination in every form, from race, religious, sex and age discrimination to discrimination against those with mental or physical challenges.

So many Americans struggle to make ends meet and face downward mobility on a daily basis. We should take a stand for one another other and see that those earning minimum wage receive their fair wages, their overtime pay and any employment benefits to which they are entitled.

Happy Independence Day to all.

On June 11, 2013, a Southern District of New York judge conditionally certified a class of Ruby Tuesday employees.  Plaintiffs filed the complaint as a collective action under the Fair Labor Standards Act as well as under New York and Florida state labor laws.  The complaint alleges that Ruby Tuesday has a nationwide policy whereby its bartenders, servers, and food runners are not permitted to enter some of the time they worked into defendant’s time-keeping system.  Plaintiffs allege that defendants have a company-wide labor scheduling system and guidelines that prohibit employees from working overtime and that headquarters carefully monitors employees’ hours.  As a result, employees are forced to work before and after their recorded shifts (“off the clock”) in order to complete all their required tasks.

Judge Baer held that plaintiffs’ proposed class met the factual burden necessary to support conditionally certifying the class.  Plaintiffs demonstrated that Ruby Tuesday maintains uniform job descriptions for its servers, bartenders, and food runners and a uniform task checklist for these employees.  It was significant to the court that Ruby Tuesday also has a companywide policy of prohibiting overtime work as well a centralized timekeeping system which allows Ruby Tuesday to track each restaurant’s overtime record.  Ruby Tuesday also has a uniform bonus policy which applies to all restaurant managers that considers the restaurant’s labor costs.  Plaintiffs also demonstrated through declarations and depositions of plaintiffs and opt-in plaintiffs that the practice of “off the clock” work occurred in 8 different restaurants located in 4 different states.

Ruby Tuesday argued that plaintiffs’ proposed class was too large and diverse because defendant employed 115,009 individuals in 710 restaurants in 39 states during the proposed class period.  The court rejected this argument by pointing to (1) plaintiffs’ declarations and depositions demonstrating that this practice occurred in 8 store locations in 4 states, (2) by the evidence that supports plaintiffs’ claim that Ruby Tuesday had a nationwide policy that is reticent to pay its employees overtime and (3) a centralized staffing and labor budget management system.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Plaintiffs brought a class action on behalf of approximately 4,000 current and former employees of Boyd & Associates, Inc. which provides security guard services.  Plaintiffs alleged that Boyd denied off-duty meal breaks and off-duty rest breaks and did not include certain reimbursements and an annual bonus payment in calculating the hourly rate of overtime pay.  Plaintiffs proposed three subclasses: (1) the Meal Break Class, (2) the Rest Break Class, and (3) the Overtime Class.  The appeals court initially issued an opinion affirming the denial of class certification of the Meal Break Class and the Rest Break Class and reversing the order denying certification of the Overtime Class.  After the court issued its opinion, the California Supreme Court issued its landmark decision Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012).  Upon reconsideration, the appellate court concluded that all three subclasses should be certified.   The only class certification question in dispute before the appellate court was the predominance of common questions.  The court concluded that in light of Brinker common issues of fact predominate in determining whether Boyd was liable for not providing off-duty meal breaks.  The court explained that “Brinker teaches that we must focus on the policy itself and address the issue whether the legality of the policy can be resolved on a classwide basis.”  The court held that that plaintiffs’ claim, that Boyd’s meal policy is unlawful, is amendable to class treatment because “the evidence presented in connection with the motion for class certification established Boyd’s on-duty meal break policy was uniformly and consistently applied to all security guard employees.”  The court reached a similar conclusion for the Rest Break Class and held that common issues predominate explaining that “the lawfulness of Boyd’s lack of rest break policy and requirement that all security guard employees remain at their posts can be determined on a classwide basis.”  Finally, the court concluded that “whether the work uniform maintenance allowance and gasoline reimbursement must be included in calculating the overtime rate of pay can be decided on a classwide basis as a legal matter based on common proof” and that “[p]laintiffs also presented evidence that Boyd had uniform, companywide policies for determining entitlement to an annual bonus.” Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Sunday, 28 April 2013 10:18By Lynn ParramoreAlterNet | Report

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Wage theft is fast becoming a top trend of the 21st-century labor market.

Imagine you’ve just landed a job with a big-time retailer. Your task is to load and unload boxes from trucks and containers. It’s back-breaking work. You toil 12 to 16 hours a day, often without a lunch break. Sweat drenches your clothes in the 90-degree heat, but you keep going: your kids need their dinner. One day, your supervisor tells you that instead of being paid an hourly wage, you will now get paid for the number of containers you load or unload. This will be great for you, your supervisor says: More money!  But you open your next paycheck to find it shrunken to the point that you are no longer even making minimum wage. You complain to your supervisor, who promptly sends you home without pay for the day. If you pipe up again, you’ll be looking for another job.

Everardo Carrillo says that’s just what happened to him and other low-wage employees who worked at a Southern California warehouse run by a Walmart contractor. Carrillo and his fellow workers have launched a multi-class-action lawsuit for massive wage theft (Everardo Carrillo et al. v. Schneider Logistics) in a case that’s finally bringing national attention to an invisible epidemic. (Walmart, despite its claims that it has no responsibility for what its contractors do, has been named a defendant.)

What happened to Carrillo happens every day in America. And it could happen to you.

How big is the problem?

Americans like to think that a fair day’s work brings a fair day’s pay. Cheating workers of their wages may seem like a problem of 19th-century sweatshops. But it’s back and taking a terrible toll. We’re talking billions of dollars in wages; millions of workers affected each year. A gigantic heist is being perpetrated against working people: they’re getting screwed on overtime, denied their tips, shortchanged on benefits, defrauded on payroll, and handed paychecks that bounce like rubber balls. A conservative estimate of unpaid overtime alone shows that it costs workers at least $19 billion per year.

The laws protecting workers are grossly inadequate, and wage thieves go punished. For giant companies like Walmart, Citigroup and UPS, getting fined is just the cost of doing business. You could even say that they’re incentivized to cheat because punishment is so unlikely, and when it happens, so light. The protections we used to take for granted, like the right to receive at least the minimum wage, the right to workers’ compensation when hurt on the job, and the right to advocate for better working conditions, are nothing more than a quaint memory for many Americans. Activist Kim Bobo, author of Wage Theft in America,calls it a “national crime wave.”

The sheer scope of the problem is jaw-dropping, sweeping across key industries and inflicting massive damage on individuals and society as a whole. In 2009, the National Employment Law Project (NELP) released a ground-breaking study, “Broken Laws, Unprotected Workers,” which found that in America, an honest day’s work is frequently rewarded with theft and abuse. A survey of over 4,000 workers in Chicago, L.A. and New York found that minimum and overtime violations were rife, and any attempt to complain or organize was swiftly met with punishment. Among the revelations:

  • 26 percent of low-wage workers got paid less than the minimum wage.
  • 76 percent of workers toiling over 40 hours were denied overtime.
  • Workers lose an average of $2,634 a year due to these and other workplace violations.

Who gets cheated?

Women, minorities, immigrants, and workers at the bottom of the wage scale are hardest hit, but wage theft is thriving across the employment spectrum.

People hired for jobs like yard work and domestic services in which the employer pays cash are denied social insurance like Social Security, and often what’s paid doesn’t add up to minimum wage. Some employees are paid for piece work, like the number of shirts produced in a garment factory, and get cheated when the tally falls below minimum wage (that’s one of the things that’s alleged to have happened to Carrillo). Another common form of theft is the “last paycheck” scam in which a worker is either fired or quits and finds that her final wages are withheld.

Low-wage tip workers are frequently the victims of theft in which the boss illegally keeps tips or makes you pay for your uniform or a ride to the job site. Restaurants are infamous for paying wages below the legal minimum; some charge a fee to convert credit card tips into cash, while others simply steal tips outright. When I was in college, I waited tables at a restaurant where the manager required the waiters to turn over tips at the end of the day, ostensibly so a certain percentage could be distributed among the cooks and other staff. I thought my manager was doing something to create fairness. Actually, he was stealing tips.

Then there’s the payroll fraud scam. Misclassifying workers as independent contractors means the business doesn’t pay overtime, employer contributions to Social Security and Medicare, or unemployment insurance. Sometimes bosses misclassify by mistake, but often they do it knowingly. Temporary and seasonal workers are especially vulnerable. The construction and trucking industries are notorious offenders, but payroll fraud impacts people like engineers, financial advisers, adjunct professors, and IT professionals. It doesn’t matter if you have agreed to call yourself an independent contractor, you may not be under the law.

Two tests are commonly used to determine your status: the Department of Labor “economic reality” test and the IRS “Right to Control Test.” These tests consider questions like: Do you set your own hours? Can you make a profit or loss depending on how you do the job? Is the job contracted for a specific time period?  Unfortunately, various federal and state entities have their own criteria, creating widespread confusion. The independent contractor issue is one of the fastest growing areas of litigation, with class actions by independent contractors jumping by 50 percent in 2010.  Congress has introduced bills to deal with this problem, but they tend to die in committee.

You might think that joining the managerial ranks would protect you from wage theft. You would be wrong. Some people are given titles as managers so they can be forced to work overtime without extra pay. Managers pressured to “improve their numbers” sometimes resort to falsifying employee records. Others deny breaks or deduct the break from the workers’ wages. Walmart has engaged in so many of these practices that researcher Susan Miloser of Washington & Lee Law School refers to retail wage theft as a result of managerial strain the “Walmart Pinch.”

How did we get here?

The world of work in America has fundamentally changed in the last 30 years, and not for the better.

In her paper, “Picking Pockets for Profit,” Susan Miloser traces a struggle for protection that began over a century ago with the public outcry over brutal workhouses where recent immigrants, women and children were paid substandard wages. Massachusetts was the first state to enact minimum wage legislation in 1912. Then came the Great Depression, and President Franklin Roosevelt responded with New Deal legislation that included the Fair Labor Standards Act pushed by his labor secretary, Frances Perkins. One of the key things the Fair Labor Standard Act did was ensure a minimum wage under the theory that wages were subject to something economists call “market failure.” The idea is that you, as a worker, are at a serious disadvantage compared to your boss when negotiating your wages. So the government has to intervene to correct this failure of the market and create a more level playing field.

The act also made provisions regulating payment for overtime. Employers who violated the law could be sued for back pay and damages. Roosevelt insisted that businesses that violated fair labor standards were toxic to the economy: “Goods produced under conditions that do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade,” he said. Roosevelt, we may assume, would frown on shopping at Walmart.

Clearly, the New Deal has somehow transformed into the Raw Deal. Since the rise of Ronald Reagan, the American workplace has been morphing from a relatively level playing field into a theater of exploitation. This process has been aided and abetted by powerful economists known as “free-market fundamentalists,” who dominate the Ivy League and policy circles. They have convinced policy makers and politicians that a voluntary system magically guided by an “invisible hand” produces outcomes that are good for most people. In their view, the economy is a system of equal exchanges between workers and employers in which everybody who does her part is respected and comes out ahead. Obviously, they don’t focus their research on labor: they may talk about unemployment or wages – keeping the former high and the latter low — but the conditions workers face are completely off the radar of these economists. (If you’d like to see how this kind of thinking plays in the mainstream media, take a gander at a recent post by Slate’s Matt Yglesias: “Different Places Have Different Safety Rules and That’s OK.”)

Here’s where we are: the twin evils of high unemployment and economic inequality have joined forces to turn workers into so many expendable units in the great capitalist machine. Union-busting, globalization, outsourcing, downsizing, and recession have turned dignified jobs into opportunities for employer predation. I have called job insecurity the “Disease of the 21st Century” and it has clearly metastasized into a situation in which people are terrified of doing or saying anything to jeopardize employment, no matter how egregious the abuse. As long as there aren’t enough jobs, bosses maintain the upper hand. In the face of public opposition and recent revelations about the flaws in research used to support austerity, deficits are still the focus of economic policy rather than job creation. All of this conspires to protect crooked employers and exploit workers, making wage theft a crime without punishment.

What do we do?

The Department of Labor is supposed to enforce fair labor practices, but budget cutting at the insistence of Big Business has had the desired effect. Currently, there are only 1,000 enforcement officers protecting 135 million workers. That would be enough to cover, say, the city of Chicago. Maybe! You can place a claim through the department, but you may not get results. Workers are often left to fend for themselves. (One thing every worker can do is consult the to at least get a sense of your rights.)

In Wage Theft in America, Kim Bobo outlines a variety of things that communities and activists are doing to address the crisis, from creating task forces to identifying agencies that help low-wage workers know when they are being cheated. There’s been some good news: campaigns to strengthen wage theft laws in several states, cities and counties are underway. The state of New York has enacted statewide legislation to protect workers from wage theft. In Miami-Dade County, a city-wide ordinance was established in 2010 which focuses on eliminating the underpayment or nonpayment of wages and targeting unscrupulous businesses. Chicago’s newly adopted wage theft ordinance will strip employers of their business license if they are caught cheating workers. But the key word is “if.”

Local direct actions have sometimes been effective in highlighting and shaming wage thieves. In Seattle, Eric Galanti of the Admiral Pub tried to withhold the final paycheck of his cook Lucio when he was deported to Mexico. But Lucio’s family, along with advocacy groups like Casa Latina, fought back by plastering the city with posters, placing messages on social media and picketing. Finally, Galanti gave in. Stories like this are encouraging, but it’s hard to imagine that sort of thing working in Mississippi.

Immigration reform is a key piece of the puzzle — it will help many low-wage, undocumented workers from being exploited by wage thieves who use deportation as the threat. Modernizing record-keeping, imposing criminal liability on wage thieves, and increasing public awareness of wage fraud would also help to combat the problem. High unemployment remains one of the biggest factors in encouraging wage theft, but we’re not making good progress in that area. The sequester is expected to lay off 750,000 Americans this year alone. Instead of helping the problem, our elected officials are worsening it. Until these issues are addressed, workers will remain vulnerable to predatory bosses. And that costs everybody.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

In a 5-4 decision, the U.S. Supreme Court in Genesis Healthcare Corp. v. Symczyk ruled that a plaintiff’s Fair Labor Standards Act collective action against Healthcare Corp. must be dismissed because the plaintiff “had no personal interest in representing others.”  The plaintiff, Symczyk, was a registered nurse who brought the case on behalf of herself and “all others similarly situated.”  She alleged that Healthcare Corp. violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for employees, even when the employees worked during those breaks.

Healthcare Corp. filed a $7,500 offer of judgment (in addition to reasonable attorneys’ fees, costs, and expenses to be determined by the court) along with its answer to the complaint.  Healthcare Corp. stipulated that if the plaintiff did not accept the offer within 10 days after service, it would be deemed withdrawn.  The district court ruled on a motion to dismiss for lack of subject matter jurisdiction that the Rule 68 offer of judgment mooted plaintiff’s lawsuit and dismissed the case.  The Third Circuit reversed, ruling “that calculated attempts by some defendants to ‘pick off’ named plaintiffs with strategic Rule 68 offers before certification could short circuit the process, and, thereby, frustrate the goals of collective actions.”

The U.S. Supreme Court reversed the Third Circuit’s decision and began its analysis by noting that “[w]hile the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claims is sufficient to render the claim moot, we do not reach this question, or resolve the split, because that issue is not properly before us.  The Third Circuit clearly held in this case that respondent’s individual claim was moot.”  The Supreme Court also noted that the plaintiff waived the mootness issue because she did not raise this argument in her petition for certiorari.  Therefore, the Supreme Court assumed that the Rule 68 offer mooted the plaintiff’s individual claim.  The Supreme Court concluded that the case was properly dismissed for lack of subject matter jurisdiction because the plaintiff had “no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In a case claiming age discrimination and interference with severance benefits, plaintiff Theresa Seibert recently defeated Quest Diagnostics’s motion for summary judgment.

The New Jersey District Court action alleges that, after more than twenty-five years as a member of the company’s sales force, Quest terminated Ms. Seibert based on her age in violation of the New Jersey Law Against Discrimination (“LAD”). Ms. Seibert also claims that her termination was part of larger pattern and practice of unjustifiable terminations based on poor performance designed to deny Quest’s older employees severance benefits
in violation of Section 510 of the Employee Retirement Income Security Act (“ERISA”).

With respect to the Section 510 claim, which plaintiff is pressing on behalf of a class of more than 100 other similarly situated former Quest employees, the company argued that Ms. Seibert “has simply no evidence to prove that interference with her eligibility for severance benefits. was a motivating factor in the decision to terminate her employment.”

The Court disagreed. Relying on the Third Circuit decision in Eichorn v.AT&T Corp., 248 F.3d 131 (3d Cir. 2001), the Court was persuaded that, at the time Ms. Seibert was terminated for cause, Quest was concerned about its financial condition and was motivated to reduce or eliminate severance costs. The evidence supporting the Court’s findings is compelling.

For example, after Quest lost revenue sources in and around 2007, its Chief Financial Officer said on an earnings calls that “a significant piece” of its planned cost reductions was going to come “from reduced people costs.”  However, a reduction of “people costs” through a reduction in force (“RIF”) would have made many of the terminated employees eligible for severance benefits under Quest’s benefits plan. A former Human Resources director testified that Quest did not use a RIF, “[b]ecause there were other ways that would be better for the business,” and that terminating an employee for poor performance is less expensive than doing so through a RIF.

To avoid using a RIF, John Nosenzo, then-Vice President of Sales and Marketing for Ms. Seibert’s organization, planned to “consolidate some open positions” and then “not fill[] some positions as they became open (either forced or unforced turnover).” According to the testimony of a long-time District Sales Manager at Quest, Mr. Nosenzo introduced an evaluation system that “ignored the realities of the marketplace to value only the achievement of sales quotas, even though those numbers became unrealistic to reach” and
was designed “to create as much pressure on the manager as possible to give as many representatives as possible who did not meet their attainment numbers, for whatever reason, an unsatisfactory rating.” Employees receiving an unsatisfactory rating were placed on performance improvement plans (“PIPs”), which were “a figurative death sentence to the [sales] representative, used to create an appearance of fairness.”

In Ms. Seibert’s case, her immediate supervisor testified that she could “[p]robably not” have met her total sales attainment goals, that the loss of many accounts in her territory “were probably uncontrollable” and that “[i]t was probably unlikely” that she could have met the sales quota he had established in her PIP.

Based on these and other facts in the record, the Court denied Quest’s motion for summary judgment, concluding that a factfinder could find that Mr. Nosenzo’s evaluation system “consciously provided management with a tool to push some employees into ‘voluntarily’ leaving the company” and “could operate as cover for a reduction in the number of employees that would otherwise trigger benefits like severance.”

The Court also rejected Quest’s motion for summary judgment on Ms. Seibert’s age discrimination claim. Plaintiff adduced testimony revealing that executives in Quest’s sales organization stated that the company “should be hiring these young and talented people from Pharma” and that the “people from Pharma were younger and more educated and therefore would be a big advantage over the representatives they replace.” In fact, Quest’s then-Chief Executive Officer, Surya Mohapatra, stated during an 2010 investor conference call that the company was actively “hiring some young people who are coming from other industries” and that, in order to address the downturn in the economy at that time, Quest needed “to have a very engaging sales organization.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm with more than a decade of experience litigating employment class actions.

Recently, in Berkely S. Scott v. Harris Interactive, Inc., No. 12-1414-cv, the Second Circuit reversed a district court finding that the reduction of an employee’s salary by one third could not as a matter of law constitute constructive discharge or constructive dismissal.

The reversal is good for employees and requires the courts to consider adverse employment actions by employers within the context of the employee’s individual circumstances, rather than some common minimum threshold that may not reflect the economic reality for higher-paid professionals.

The plaintiff in Scott entered into an employment agreement with his former employer. Under the terms of the agreement, the plaintiff would hold the position of “SVP Global Accounts & Business Development” at a starting salary [of] $220,000 per year.” Although plaintiff’s employment was at-will, meaning either he or his employer could terminate the employment relationship at any time and for any reason not expressly prohibited by law, if plaintiff was terminated for any reason other than “cause,” he would be entitled to severance benefits. Conversely, if plaintiff resigned or was terminated for cause, he would have to return a $15,000 signing bonus he received at the time of hire.

Despite the terms of the employment agreement, plaintiff’s employer reduced his salary to $150,000 during the first year of his employment. Soon afterwards, plaintiff notified his employer that he deemed himself constructively discharged and sought severance benefits.

The parties disagreed about whether plaintiff resigned (and, thus, owed his employer the $15,000 signing bonus) or was terminated without cause (and, thus, was owed severance benefits).

The district court ruled that plaintiff’s reduction in salary by $70,000 did not constitute constructive discharge as a matter of law because “the reduced amount compare[d] favorably to the earnings of other accomplished persons in the national workforce.”

The consequence of the the district court’s line of reasoning is to raise arbitrarily the burden of demonstrating constructive discharge for professionals receiving above-average pay.

The Second Circuit disagreed with the district court’s narrow view of the law, ruling that it should also have considered plaintiff’s reduction in pay in terms of the percentage of the reduction and in terms of the parties’ reasonable expectations.

Plaintiff’s reduced salary of $150,000 undoubtedly compares favorably to the earnings of other similarly accomplished professionals, as noted by the district court. However, the Second Circuit’s ruling sensibly requires the lower courts to consider reductions of pay in the circumstances of plaintiff’s case.

Here, the Second Circuit found that sufficient questions of fact on the disputed issue of whether plaintiff was constructively discharged or resigned did exist due to the percentage by which his salary was reduced and the terms of the employment agreement, as well as other factors, including changes to plaintiff’s title and responsibilities and evidence the plaintiff’s employer repeatedly told him that he had the option to resign.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm with more than a decade of experience litigating employment class actions.

One year ago, the New York Home Care Wage Parity Act, Public Health Law § 3614-c, went into effect and established minimum compensation requirements for home care aides who perform Medicaid-reimbursed work for certified home health agencies (“CHHAs”), managed care plans (“MCPs”), and long term health care programs (“LTHHCPs”).  The Wage Parity Law was designed to eliminate wage disparities in the state’s Medicaid-funded home health care workforce through three incremental wage increases.

The home care workforce is divided into two groups: (1) home attendants, also known as “personal care aides” and (2) home health aides.  Home attendants are required by state law to have 40 hours of entry-level training and 6 hours of in-service training annually.  Home health aides are required by federal and state law to have 75 hours of entry-level training and 12 hours of in-service training annually.  These two groups of workers have historically received different rates of pay resulting in home attendants receiving a minimum of $10 per hour while home health aides received an average wage of $8 per hour.  This resulted in a wage inversion meaning the more highly trained aides were earning less per hour than the home attendants.  The Wage Parity Act was designed to address this inversion.

Under the Wage Parity Act, employers are required to pay home care aides a minimum wage of $9.00 per hour starting on March 1, 2012 and hourly pay will increase to $10 per hour on March 1, 2014.  Employers must also either provide individual health insurance or pay an additional supplemental benefit.  Have you benefited from the Wage Parity Act?  Tell us your story here.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The Family and Medical Leave Act (“FMLA”) entitles eligible employees of covered employers to take unpaid leave for (1) the birth of a child and to care for the newborn child; (2) the placement of a child for adoption or foster care and to care for the newly placed child within one year of placement; (3) care for a family member with a serious health condition; (4) the employee’s own serious health condition that makes the employee unable to perform the functions of his or her job; or (5) certain military-related reasons. During the FMLA leave, the employee’s job is protected and the employee receives health insurance coverage under the same terms and conditions as if the employee had not taken leave.

The FMLA was amended in January 2008 to provide two types of military family leave. The first, Exigency Leave, is a 12-week leave for eligible family members to deal with exigencies related to a call to active duty of service members of the National Guard and reserves. The second, Military Caregiver Leave, provides for a 26-week leave for eligible family members to care for seriously ill or injured of the regular armed forces, National Guard and reserves. In 2010, Congress amended the FMLA again and expanded both types of military family leave by expanding Military Caregiver Leave to include family members of certain veterans with serious injuries or illnesses who are receiving medical treatment, recuperation or therapy if the veteran was a member of the armed forces at any time during the five years preceding the date of the medical treatment recuperation or therapy and to include the to the family member of current service members with a preexisting condition aggravated by military service in the line of duty on active duty. The 2010 amendments also expanded Exigency Leave to include family members of those in the regular armed forces but added the requirement that service members be deployed to a foreign country.

On February 6, 2013, the Department of Labor which regulates and oversees enforcement of the FMLA issued a Final Rule, which goes into effect on March 8, 2013. These new regulations increase and clarify, among other things, the scope of military exigency leave, extended military caregiver leave, and airline flight crew employees FMLA eligibility requirements. First, the Final Rule places limits on Exigency Leave to arrange for child care or attend certain school activities for a military member’s child. Specifically, the military members must be the spouse, son, daughter or parent of the employee seeking leave. Second, the Final Rule increases the maximum number of days from five to 15 calendar days for leave to bond with a military member on rest and recuperation leave consistent with the amount of time provided to the military member. For example, if the military allows a member 10 days of rest and recuperation then the employee is entitled to 10 days. Finally, the Final Rule adds parental care as a qualifying exigency for which leave may be taken. This allowance tracks the child care provisions and allows leave for the spouse, parent, or child of a military member in order to do the following: (i) arrange for alternative care for a parent of a military member when the parent is incapable of self care and the covered active duty of the military member necessitates a change in existing care arrangements; (ii) provide care for a parent of a military member on an urgent, immediate-need basis when the parent is incapable of self-care and the need to provide such care arose from the active duty status of the military member; (iii) admit or transfer a parent of the military member to a care facility when the admittance or transfer is necessitated by the military member’s covered duty status; or (iv) attend meetings with staff at a care facility for a parent of a military member.

The Final Rule also includes provisions to align the existing regulations with the passage of the Airline Flight Crew Technical Corrections Act (AFCTCA), effective December 21, 2009. Because the AFCTCA established a special hours-of-service requirement for airline flight crew employees, the Final Rule provides that an airline flight crew employee can meet the hours-of-service requirement under the FMLA if he or she (1) meets the standard threshold (1,250 hours in 12 months) or (2) has worked or been paid for not less than 60% of his or her applicable monthly guarantee and has worked or been paid for not less than 504 hours. The Final Rule also clarifies that it is the employer who has the burden of proof in showing that an airline flight crew employee is not eligible for leave. The Final Rule allows airline flight crews up to 72 days of leave during any 12-month period to use for one or more the following reasons: (i) an employee’s basic leave entitlement for the employee’s own illness; to care for an ill spouse, child or parent; (ii) for the birth or adoption of a child or placement of a child in the employee’s home for foster care; or (iii) for exigent circumstances associated with the employee’s spouse, child or parent on covered active military duty. This entitlement is based on a uniform six-day workweek for all airline flight crews, regardless of time actually worked or paid, multiplied by the statutory 12-workweek entitlement. Airline flight crews employees are entitled to up to 156 days military caregiver leave.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In Frazier v. Castel Ford, Ltd., 2013 WL 265072 (January 24, 2013), the Maryland Court of Appeals put the brakes on a tactic that has gained favor among defendants in class actions—and that has caught the attention of the Supreme Court, for better or for worse—where a defendant attempts to moot the claims of a potential class representative by paying his damages in full at the outset of the case.  This tactic is referred to as “picking off” the class representative.  The court in Frazier held that an attempt to pick off the class representative cannot moot a class action, at least where the plaintiff has not had a “reasonable opportunity” to move for class certification.

Picking off the class representative benefits defendants because they can get out of a class action for the small amount they owe to the class representative (usually a single person), whose claims are typically very small on an individual basis.  This tactic, however, is particularly dangerous because it allows a defendant to thwart the claims of the proposed class, who may never bring their own actions.  Recognizing these principles, the Maryland Court of Appeals held that a defendant cannot defeat a class action by tendering all of the plaintiff’s damages—he must at least be given a “reasonable opportunity” to move for class certification, “including any necessary discovery.”

In Frazier, the plaintiff alleged that the defendant, a Ford dealer, misrepresented the expiration date of his extended warranty by two years.  The plaintiff’s complaint asserted two causes of action—one for violation of Maryland’s Consumer Protection Act, and one for common law fraud.  The plaintiff alleged that he incurred unexpected repair costs that he would not have paid if the warranty lasted as long as the dealer represented.

After plaintiff commenced his action and began to take discovery, the defendant sent him a check for all the damages it claimed he was owed.  Thereafter, the defendant moved for summary judgment and made a motion to deny class certification.  The trial court granted the defendant’s motion for summary judgment on the grounds that the plaintiff’s complaint was mooted by the tender of his damages, and granted the motion to deny class certification because the plaintiff, who had now purportedly been made whole, was not a member of the class he sought to represent.

The Maryland Court of Appeals reversed.  The court noted that the concept of mootness is more flexible in a class action than in an individual case.  The reason for this relaxed mootness standard, the court elaborated, was illustrated by the defendant’s actions: before filing his class action complaint, the plaintiff contacted the dealership and was ignored; the court stated that the defendant made “no effort to rectify the situation until the class action complaint was filed.”  Then, once the complaint was filed, the defendant “immediately took action to moot it by tendering individual damages to the plaintiff . . . before the plaintiff had any reasonable opportunity to seek class certification or to conduct discovery addressed to the merits of class certification.”

The court noted that, if this type of behavior were permitted:

“[M]any meritorious class actions will never get off the ground. It will be particularly tempting to ‘pick off’ a putative class representative in cases where the underlying conduct affected many people but each claim, including the class representative’s, is small or moderate in size—a type of case for which the class action procedure was devised.”

The court noted that other jurisdictions—including the Ninth Circuit and the Third Circuit—had come to the same conclusions, based on substantially similar reasoning.

One practice pointer from this case: the court did not hold that a tender of damages fails to moot a class action in any and all circumstances.  Rather, the court made clear that a class representative cannot be picked off “if the individual plaintiff has not had a reasonable opportunity to seek class certification, including any necessary discovery.”  The court held that the lower court, on remand, could determine whether the plaintiff had an “adequate opportunity to file a timely motion for class certification” and, if so, could permit him to move for class certification.

Generally under the Fair Labor Standards Act (“FLSA”) an employer must pay its employees overtime compensation of one and one-half times the employee’s regular rate of pay for hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1). This requirement does not apply to individuals who (1) work at a retail establishment (75% of the establishment’s gross annual revenues must be sales to an end user vs. wholesale); (2) regularly receive more than half of his or her compensation from commissions; and (3) receive at least 1-1/2 times the minimum wage for all hours worked. However, qualifying for this exemption can be more difficult than employers realize. In addition, the wage payment structure required for this exemption is quite complex and often misapplied by employers.

To rely on this overtime exemption under the FLSA, employers must demonstrate that more than half of the employee’s compensation for a representative period of at least one month represents commissions on goods or services. See 29 U.S.C. § 207(i). In order for compensation to be considered a commission, the amount paid to the employee must be based on a “bona fide commission rate.” 29 U.S.C. § 207(i). Accordingly, in determining whether more than half of an employee’s compensation came from commissions, a court must also determine whether the commissions paid to Plaintiff were the result of “the application of a bona fide commission rate.” Id. Courts have interpreted this phrase to require an inquiry into “whether the employer set the commission rate in good faith.” Erichs v. Venator Grp., Inc., 128 F. Supp. 2d 1255, 1259 (N.D. Ca. 2001).

While “the case law on the meaning of ‘commission’ under the retail commission exception is sparse,” Parker v. NutriSystem, Inc., No. 08 Civ. 1508, 2009 WL 2358623, at *4 (E.D. Pa. July 30, 2009), the United States Department of Labor has provided some guideposts for analyzing compensation plans in which “the employee will be paid [a guaranteed] stipulated sum, or the commission earnings allocable to the same period, whichever is the greater amount.” 2 9 C.F.R. § 779.416(a). The DOL regulations offer two examples of what is not a “bona fide commission rate.” First, a commission rate is not bona fide if the formula for computing the commissions is such that the employee, in fact, always or almost always earns the same fixed amount of compensation for each workweek (as would be the case where the computed commissions seldom or never equal or exceed the amount of the draw or guarantee). Another example of a commission plan which would not be considered bona fide is one in which the employee receives a regular payment constituting nearly his or her entire earnings which is expressed in terms of a percentage of the sales which the establishment or department can always be expected to make with only a slight addition to his wages based upon a greatly reduced percentage applied to the sales above the expected quota. 29 C.F.R. § 779.416(c).

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The United States Supreme Court granted certiorari of a decision by the Third Circuit Court of Appeals, Symczyk v. Genesis HealthCare Corp., 656 F.3d 189 (3d Cir. 2011.  The Third Circuit in Symczyk held that a collective action brought under the FLSA is not rendered moot when the defendant makes a Rule 68 Offer of Judgment in full satisfaction of the individual claim before the class representative moves for conditional certification and before any other plaintiff opts into the action.

In Symczyk the Rule 68 offer was made before the plaintiff moved for conditional certification of the collective action. The defendant then moved to dismiss arguing that the Rule 68 Offer of Judgment had rendered the plaintiff’s claim moot, and the District Court agreed with the defendant and granted the motion to dismiss.

The Third Circuit reversed the District Court expressing concern that such settlements could allow employers to “pick off”  plaintiffs.  The Third Circuit reasoned that: “When Rule 68 morphs into a tool for strategic curtailment of representative action, it facilitates an outcome antithetical to the purpose behind Section 216(b).

The Supreme Court granted Genesis’ petition for certiorari and stated the question presented as “Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims.”

Collective actions are vital and necessary to encourage compliance with the FLSA by raising the stakes for employers who break the law.  If the Supreme Court reverses the Third Circuit and allows defendants to “pick off” plaintiffs it will make it very difficult to prosecute FLSA collection actions and allow employers engaging in “wage theft to avoid the full measure of the consequences of their actions” (quoting, Brief of Amici Curiae The National Employment Lawyers Association, et al., in Support of Respondent).

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

A Pennsylvania state judge has ruled that Daikon Lutheran Social Ministries owes its employees over $670,000 in unpaid overtime in addition to prejudgment interest.  Plaintiff Catherine LeClair filed the class action complaint against Daikon, a provider of senior living and health services through its operation of nursing homes, residential facilities and outpatient treatment facilities.  The plaintiff was hired by Daikon as a certified nursing assistant.  She was paid an hourly wage and classified as non-exempt from the overtime pay provisions of the Pennsylvania Minimum Wage Act (“PMWA”).  The plaintiff claimed that Daikon’s method of calculating overtime premium pay violated the PMWA.

Under the PMWA, covered employees receive overtime premium pay for all hours worked over 40 hours in a workweek (defined as 7 consecutive days).  Plaintiff argued that Daikon violated the PMWA by paying her and others according to an “8/80 Rule” so that the employees were limited to overtime premium pay to hours worked in excess of 80 hours in a 14 day period or in excess of eight hours in one 24 hour day.  The PMWA was amended in July 2012 to provide certain health care employers with the opportunity to use the “8/80 Rule.”

Judge Michele A. Varricchio held that the words in the PMWA are clear and that the PMWA specifies that non-exempt employees should receive overtime pay for all hours worked over 40 in a 7 day workweek.  The court concluded that “Daikon’s use of the ‘8/80 Rule’ to calculate overtime premium pay violates the PMWA’s clear and unambiguous mandate that employees receive overtime premium pay whenever they work in excess of 40 hours during a seven-day workweek.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The Americans with Disabilities Act (“ADA”) requires employers to make “reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability.”  42 U.S.C.A. § 12112(b)(5)(A).  To determine an appropriate accommodation employers are required to engage in an interactive process with an employee when they know that the employee has a disability.  Can an employer reserve particular work modifications for those individuals who meet specific performance standards and refuse to consider these modifications during the interactive process with an employee whose unaccommodated disability has interfered with his performance?  A recent decision, Goonan v. Fed. Reserve Bank, 12 Civ. 3859 (JPO) (S.D.N.Y. Jan. 7, 2013), answers this question with a resounding “no.”

Bruce Goonan worked for the Federal Reserve Bank of New York (“the Fed”) for twenty-five years.  During the attack on the World Trade Center (“WTC”) on September 11, 2001, Mr. Goonan was trapped in his office two blocks from the WTC and believed that he would not survive.  As a result, he began to suffer from severe anxiety.  Through counseling he was able to cope with his symptoms and continue working for the Fed.  However, in January 2010, he was moved to a new building.  His new office overlooked Ground Zero.  Having to walk past Ground Zero on his way to work caused Mr. Goonan to develop flashbacks of 9/11.  He became suicidal, anxious, depressed, and suffered from nightmares.  For the first time in his career at the Fed Mr. Goonan received an unsatisfactory review.  A psychiatrist diagnosed him with PTSD and Major Depression.  In order that his therapy would have the opportunity to work, the psychiatrist recommended that Mr. Goonan be allowed to work in a different building where some of his co-workers already worked or to telecommute, as 50% of the employees in his department did on a regular basis, so that he would not have to pass Ground Zero each day.  The Fed offered “accommodations” such as transfer to a cubicle on the other side of the building, listening to soothing music through a headset, and use of a multi-spectrum light, but adamantly refused to consider any accommodation which involved Mr. Goonan working at a different location.  Mr. Goonan’s symptoms, including suicidal thoughts, persisted and by May of 2011 he decided to retire.

The Fed moved for summary judgment.  It explained its denial of Mr. Goonan’s request for a transfer to a different work location by pointing to his “poor performance.”  The Court found this explanation “troubling, since denial of an accommodation on the ground that a non-accommodated, disabled employee is experiencing performance inadequacies turns the rationale for the ADA’s rule of reasonable accommodation on its head.”  The Fed argued that Mr. Goonan had terminated the interactive process by retiring, but the Court denied summary judgment and held that the facts as presented above were sufficient to support a claim that the Fed was responsible for the breakdown of the interactive process and therefore liable for discriminating against Mr. Goonan by failing to accommodate his disability.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In Menga v. Clark Dodge & Company, Inc., et al., Index No. 650081/2011, the Supreme Court of the State of New York recently denied a bid to compel arbitration of two stockbrokers’ putative class claims alleging failure to pay overtime and impermissible wage deductions, despite the presence of an arbitration provision in their employment agreements.

Deric Menga and Wildred Ignace (the “Plaintiffs”) are stockbrokers for Clark Dodge & Company (the “Defendants”), a brokerage and wealth management services provider.  In their pleading, Plaintiffs allege that the Defendants (1) failed to pay overtime in violation of 12 NYCRR § 142-2.2; (2) took impermissible wage deductions contrary to N.Y. Labor Law § 193; (3) took illegal pay deductions and deductions from wages in violation of N.Y. Labor Law § 198-b; and (4) failed to pay wages and commissions on a timely basis contrary to N.Y. Labor Law § 191.

The Defendants sought to dismiss Plaintiffs’ claims because, among other reasons, Defendants believed Plaintiffs asserted their claims in the wrong forum and should be compelled to arbitrate the dispute before the Financial Industry Regulatory Authority, Inc. (“FINRA”). In support of their argument, the Defendants relied on an agreement signed by the Plaintiffs, which states that Plaintiffs agreed to arbitrate any dispute “that is required to be arbitrated under the rules, constitutions, or by-laws of [FINRA] as may be amended from time to time…”

Defendants’ argument is an attractive one, given the boon employers received under the United States Supreme Court decision AT&T Mobility v. Concepcion, 563 U.S. ___ (2011), which, under limited circumstances, permits employers to force employees to resolve their disputes in arbitration on an individual basis. However, Concepcion concerned the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (the “FAA”). FINRA regulations are not nearly so antagonistic to class proceedings.

It is true, as the Defendants argued, that FINRA Rule 13204(d) prohibits arbitration of class action claims and specifically prohibits enforcement of “any arbitration agreement against a member of a… putative class action with respect to any claim that is the subject of the… class action…” However, that prohibition applies only in an extremely limited set of circumstances: (1) when class certification has been denied; (2) when an existing class has been decertified; or (3) when a member of the certified or putative class has been excluded from the action by either the court or the member’s own determination.

Because none of those conditions had been met with respect to the Plaintiffs, the court denied the Defendants’ attempt to compel arbitration.

Are you considering filing a lawsuit against your present or former employer but have questions about whether an arbitration provision in your employment agreement or some other agreement with your employer requires you to resolve your dispute in arbitration? If so, please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The Northern District of Mississippi recently ruled in Newsom, et al., v. Carolina Logistics Services, Inc., No. 2:11-CV-00172, that food does not constitute wages under the Fair Labor Standards Act (“FLSA”) in granting partial summary judgment in plaintiffs’ favor.

Plaintiff Cedric Newson began work for defendants Carolina Logistics Services, Inc. (“CLS”), as a facility manager in 2008. Shortly after starting his work, Newsom made a special arrangement with his center manager, under which Newsom was permitted to clock out from work after his shift and clean CLS’s warehouse in exchange for a banana box of food. Following a transfer to a new and larger facility, Newsom recruited plaintiff Shanda Bramlett to assist him with the more arduous work.

In 2010, the center manager with whom Newsom had made his special arrangement was replaced. When the new manager learned of the arrangement, he fired Newsom for “stealing” banana boxes of food. Afterwards, Newsom and Bramlett, who remained on the job, initiated this lawsuit seeking, among other things, unpaid overtime due under the FLSA.

It was undisputed that Newsome and Bramlett worked for CLS “off the clock” in exchange for a banana box of food. Among the issues before the Court was whether plaintiffs were properly compensated with food.

Defendants argued that food fell within the definition of “wages” under the FLSA. The Court was not persuaded.

Under the FLSA, the term “wages” can include “board, lodging, and other facilities.” See 29 U.S.C. § 203(m).  However, the Court noted that the statute does not mentioned food, sustenance, or any other similar term. Moreover, in order for “board, lodging, and other facilities” to constitute wages under the FLSA, they must be “customarily furnished by such employer to employees.Id. (emphasis supplied). CLS failed to make any such argument with respect to the banana boxes.

Despite the undisputed fact that Newsom and Bramlett agreed to and accepted the special arrangement, the Court concluded that plaintiffs had not been paid for their after-hours work and granted summary judgment on plaintiffs’ FLSA claim in their favor.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

More and more in this increasingly competitive retail world, companies are requiring their employees to work long shifts, overnight shift, and holidays.  This year, some retailers like Macy’s, Toys ‘R Us, Wal-Mart and Target are getting a jump on Black Friday by opening at midnight or earlier on Thanksgiving.

Whether you are full time, part time or as a seasonal worker, you work hard for you money so make sure it’s not being stolen from you by your employer. Covered non-exempt employees are entitled to receive a minimum wage plus overtime compensation at a rate of not less than one and one-half times the regular pay rate for hours worked in excess of 40 hours per work week.

Wage theft – a “crime that no one talks about” says Kim Bobo, the founder of Interfaith Worker Justice, is stealing billions of dollars worth of wages stolen from millions of worker each year.  But people and law makers have started talking about it and, on April 9, 2011, New York expanded its Wage Theft Prevention Act to include expanded civil and criminal remedies for failing to properly pay employees.

Some argue that this is a time for people to be with their families.  But restaurants are often open on Thanksgiving and other holidays and many waiters and waitress and others have worked these jobs for years and no one has argued that all restaurants should close on holidays.  People get sick and hospital are open and nurses and doctors and all other workers have to work.  Also, we wouldn’t even consider that our police and firefighters shouldn’t work on holidays.

Even though I am sure I will not be shopping on Thanksgiving, I am not passing judgment on whether I think it is appropriate for stores to open on at midnight or any particular holiday.  But I am concerned that all persons who work on holidays or overnight shifts or overtime get paid the proper amount of wages due and owing to them and I will investigate any claims of unpaid overtime wages due hardworking current and former employees.

Abbey Spanier LLP wishes everyone a happy Thanksgiving.


Black Friday is the name given to the day following Thanksgiving, traditionally the beginning of the Christmas shopping season and often described as the busiest shopping day of the year. This year, thousands of Wal-Mart employees will participate in a walk-out on Black Friday to protest the Company’s unfair employment practices.

These employees are calling on Wal-Mart, the country’s largest employer, to end retaliation against speaking out for better pay, fair schedules and affordable health care. This retaliation includes shuffling around shifts, cutting hours and moving employees from department to department. OUR Walmart, the group organizing the protest, says that it is specifically protesting against the company’s retaliation against its employees and doesn’t have specific demands tied to the Black Friday walkout.

Although Wal-Mart said that the striking workers represent a small minority of their over 1 million employees, in an effort to stop the protest, or at the very least attempt to deter those employees from participating, Wal-Mart filed a complaint last week with the National Labor Relations Board, claiming that the United Food and Commercial Workers Union and, OUR Walmart, unlawfully organized picket lines and other demonstrations in the past six months in violation of federal law.

Have you been the subject of retaliation by your employer for complaining about or reporting unfair labor practices ? If so, please tell us your story.

Abbey Spanier, LLP,  located in New York City, is a well-recognized national class action and complex litigation law firm.

As of October 23, 2012, Broward County became the second county in Florida to adopt an ordinance prohibiting wage theft.  In a 7-2 vote, the Board of County Commissioners voted to create a new law to deal with the substantial problem of wage theft in Florida.  This Ordinance will help employees who are not paid the minimum wage, forced to work off the clock, or not paid overtime.

The Ordinance will make it easier for employees to sue their employers for unpaid wages.  The Ordinance applies to any employer of any size with employees working in the county.  An employer is liable for wage theft if an employer does not pay the employee with 14 days of the wages being earned unless the employer has another established policy or practice of regular pay periods.

Any employee who believes they are owed $60 or more can bring a claim under the Ordinance.  The employee must first notify the employer in writing within 60 days after the wages were due that they are owed compensation.  The written demand must list all wages that the employee claims is owed, the estimated or actual work dates and hours for which payment is sought, and the total amount of unpaid wages.  If the employer does not pay the wages within 15 days, the employee can file a complaint with the county.  When an employee is able to establish wage theft, the employer will be obligated to pay back wages, the county’s administrative costs, and attorneys’ fees. The employee has up to one year to file a claim for wage theft.

A final version of the Ordinance will be considered later this year and if it is passed it will become effective on January 1, 2013.  Abbey Spanier will provide updates on the Ordinance and will let readers know if it becomes effective in 2013.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Have you lost most of your income because of Hurricane Sandy?  If you live or work[1] in those counties in New York, New Jersey, or Connecticut that have been declared disaster areas by President Obama, you may be eligible for federal Disaster Unemployment Assistance (DUA).  DUA aids individuals who do not meet the requirements necessary to receive regular Unemployment Insurance Benefits (UIB) although they lost employment as a direct result of a disaster such as Sandy.  In addition to employees who do not qualify for UIB, individuals who are not considered employees for purposes of UIB, such as those who are self-employed or farmers, may be able to receive DUA if they lost income as a direct result of Sandy.  Even individuals who had been scheduled to begin a new job, but never started their employment because of Sandy may be eligible for DUA.  In addition, if an individual became the head of a household because the bread winner died as a result of Sandy, she or he may be eligible for DUA.

DUA is a federally funded program designed to help individuals whose loss of income was directly caused by a disaster.  A few examples of situations that may cause you to be eligible include (1) an injury resulting from Sandy that makes you unable to work, (2) damage to your workplace that prevents you from working there, and (3) inability to travel to your workplace as a result of Sandy.  Although DUA is a federal program authorized by section 410 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. § 5177, and governed by regulations promulgated by the U.S. Department of Labor, it is administered by the states.  To learn more about DUA in your state you can go to your state’s website by clicking on the following links:  New York, New Jersey, Connecticut.

If you think that you may be eligible for DUA, you should file a claim with the appropriate state.  Although the destruction caused by Sandy may make it hard for you to file quickly, it is important to file as soon as possible because the deadline to file is December 3.  If Sandy destroyed necessary documents or made them inaccessible, file now so that you do not miss the deadline.  After you have filed you can work with the agency to document your claim.

We at Abbey Spanier, LLP send our heartfelt prayers to all who have suffered in this disaster.

[1] Generally an individual must live or work in a disaster area to qualify for DUA.  However, there are limited exceptions in the event that an employer or self-employed individual received a “majority of its revenue or income from an entity in the major disaster area that was either damaged or destroyed in the disaster, or an entity in the major disaster area closed by the federal, state or local government in immediate response to the disaster.”  20 C.F.R. 625.5(c)(3).  In addition, individuals who cannot reach their workplace because it requires traveling through the disaster area may be eligible for DUA.

The Fair Labor Standards Act of 1938 (FLSA) was enacted during a period of high unemployment to ensure that employees would receive a “fair day’s pay for a fair day’s work.”  See Overnight Transp. Co. v. Missel, 316 U.S. 572, 578 (1942) (quoting “presidential message which initiated the legislation”).  Now, during another period of high unemployment the promise of the FLSA is being tarnished as more and more people are working for no pay; internships are considered by many to be the new entry level job.  In fact searching Google on the exact phrase “internship the new entry level job” produced close to 6,000 hits on August 22, 2012.  Most of these internships are unpaid as noted by the New York Times article, “Jobs Few, Grads Flock to Unpaid Internships.”

Despite the popularity of internships the FLSA does not exclude employees from its coverage simply because they are designated as “interns.”  In Walling v. Portland Terminal Co., 330 U.S. 148 (1947), the Supreme Court provided guidance on when trainees, including interns, do not have to be paid.  The Walling Court emphasized the FLSA’s broad definition of the employment relationship noting that “[t]his Act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.”  Id. at 150-51.  Even so the Court ruled that the act’s definitions of ‘employ’ and ‘employer’ “cannot be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction.”  Id. at 152.

Based on the Walling decision, the Wage and Hour Division of the U.S. Department of Labor has developed a six part test to determine when for-profit employers in the private sector can avoid paying interns.  The FLSA does not require that an intern be paid the minimum wage and overtime if the internship (1) “is similar to the training which would be given in an educational environment”; (2) “is for the benefit of the intern”; (3) “does not displace regular employees”; (4) does not provide an “immediate advantage” to the employer; (5) does not entitle the intern to employment at its conclusion; and (6) is based on an agreement that the intern will not be paid.  All six of these criteria must be met for the internship to validly be an unpaid one.  However employers, even large profitable employers, often ignore the legal requirements of the FLSA.

In September 2011, two former interns who had worked on the production of the highly successful film “Black Swan” sued a unit of the Fox Searchlight Pictures, Inc.  Although “Black Swan” produced huge profits, costing only $13 million to make and grossing over $300 million worldwide, the interns who worked on that film were not paid.  The plaintiffs, Eric Glatt and Alexander Footman, brought the suit on behalf of themselves and other interns who worked without pay on Fox Searchlight films.  They stated that instead of the internship being a learning experience, most of their time was spent performing productive work for Fox Searchlight, including filing paperwork, preparing coffee, and taking out the trash.

After examining the documents produced by Fox Searchlight in discovery the plaintiffs determined that the policies that resulted in Glatt and Footman’s lawsuit are common throughout the companies that make up the Fox Entertainment Group, Fox Searchlight’s parent company.  Fox Entertainment Group includes numerous companies besides Fox Searchlight, including Twentieth Century Fox and other film production companies as well as cable and broadcast television production, distribution, and network companies.  As a result the plaintiffs petitioned the court and on October 9 they received permission to amend their complaint to broaden the lawsuit to include all individuals in the internship program of the Fox Entertainment Group.   If you too have performed work for no pay, tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

I have previously blogged about instances in which pregnant women have unsuccessfully sued their employers for discrimination. However, if the Pregnant Workers Fairness Act, which was introduced into the Senate on September 19, 2012 by U.S. Senators Bob Casey (D-PA) and Jeanne Shaheen (D-NH) is passed, pregnant women will have protections under the law which they do not currently have. In 2010, 62 percent of women who gave birth in this country held jobs outside of the home. The notion that no law exists to require employers to accommodate their pregnant employees’ condition in order to ensure their health is ludicrous.

Currently, the only legal protections available to pregnant women is provided by the Pregnancy Discrimination Act which only makes it illegal to fire a woman because she is pregnant. However, that law does not cover the medical limitations and requirements which may prevent a pregnant woman from completely performing her job duties.   Why We Need the Pregnant Workers Fairness Act:  Stories of Real Women, compiled by the National Women’s Law Center, among others, provides accounts of pregnant workers who were denied minor adjustments to their job duties that they needed to continue safely working throughout pregnancy. It also explains the painful health and economic consequences to these workers and their families. Once such example is that of a pregnant retail worker in Indiana who was denied light duty when the doctor recommended lifting restrictions and as a result suffered pregnancy complications and was fired:

When Shelly (name changed to protect privacy) became pregnant she was working two jobs to support her family: the overnight shift stocking shelves for a major national retail chain and the day shift packing items to ship for a medical supply company. Shortly after she became pregnant, her doctor advised her not to lift more than 20 pounds. When she told the medical supply company about her lifting restrictions, the company immediately accommodated these restrictions. The major national retailer refused to modify her duties; requiring her to continue to life heavy items. She experienced a lot of pain while doing the heavy lifting and miscarried shortly thereafter. When she became pregnant months later she was told she still could not get any modification of her duties, despite management’s awareness of her previous miscarriage. She was told her only option was to take unpaid FMLA leave. Her doctor refused to state on the company’s FMLA form that she needed to go on leave, since she was a healthy woman, and only needed to avoid lifting more than 20 pounds. When she communicated this to the company, she was fired. She filed a case in court against the company but lost. In her words, the experience “destroyed my life, ruined my health, and ruined my marriage.”

This is exactly where the Pregnant Workers Fairness Act will help women workers and their families. The bill would provide the same protections to pregnant women that are extended to those with disabilities under the Americans with Disabilities Act (“ADA”). The bill, modeled after the ADA would prevent employers from forcing pregnant women out of the workplace by placing them on unpaid leave, firing them or forcing them to quit when they are denied the accommodations they need to continue working safely. The bill would also help ensure that employers provide job modifications when it would allow a woman to continue working during pregnancy.

If you agree that the Pregnant Workers Fairness Act is a necessary protection for women workers, contact your Senator and urge him or her to support the bill.

Have you been the subject of discrimination for being pregnant, seeking accommodations or taking maternity leave ? If so, please tell us your story.

Abbey Spanier, LLP,  located in New York City, is a well-recognized national class action and complex litigation law firm.

On February 28, 2012, a California appelate panel refused to enforce an arbitration provision as unconscionable in Mayers v. Volt Management Corp., _ Cal.App.4th _ (Feb. 2, 2012). That’s big news. It was not obvious that this defense survived the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion, 563 U.S. __ (2011), when it was handed down last year.

In Mayers, the plaintiff sued his former employer, Volt Management Corp., for violation of the California Fair Employment and Housing Act, Government Code §§12900 – 12996 (“FEHA”). Rather than opposing the suit on the merits, Volt moved to compel arbitration.

The Court rejected the arguments Volt advanced in support of its motion, finding the arbitration provision unenforceable under California law:

The arbitration provisions contained in the employment application, employment agreement, and employee handbook each required that plaintiff submit employment-related claims to arbitration pursuant to the “applicable rules of the American Arbitration Association in the state” where plaintiff was employed or was last employed by defendant. Plaintiff was not provided with a copy of the controlling American Arbitration Association (AAA) rules or advised as to how he could find or review them. The provisions also failed to identify which set of rules promulgated by the AAA would apply. They further stated that the “arbitrator shall be entitled to award reasonable attorney’s fees and costs to the prevailing party.” For the reasons discussed post, such a prevailing party attorney fees term exposed plaintiff to a greater risk of being liable to defendant for attorney fees than he would have been had he pursued his FEHA claims in court.

In addressing Concepcion, which holds that state law may not prohibit arbitration “of a particular type of claim” or “rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable,” the Court explained why its decision was consistent with the Supreme Court’s ruling:

In the instant case, plaintiff opposed the motion to compel arbitration by arguing that the specific arbitration provisions before the court contained elements of procedural and substantive unconscionability, which render those elements unconscionable. Plaintiff did not argue the arbitration provisions were unenforceable under California law because they required the arbitration of a particular type of claim. Nor has plaintiff based his unconscionability argument “on the uniqueness of an agreement to arbitrate.”

Preserving the defense of unconscionability is important, particularly in the employment context. As in Mayers, employees are generally in a weaker bargaining position and cannot negotiate the terms of their employment agreements.

Unfortunately, Mayers may not not have a lasting impact. It and Sanchez v. Valencia Holding Company, LLC, _ Cal. App. 4th _ (2011), an unrelated case, were both recently accepted for review by the California Supreme Court (see here and here). Briefing on Mayers is pending while the Court resolves the following question in Sanchez:

Does the Federal Arbitration Act, as interpreted in [Concepcion], preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?

The California Supreme Court should answer this question in the negative and take a step toward affirming Mayers, a persuasive and well-reasoned decision. It would be an important victory for a group that is, at least today, too often the underdog.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

A district court in the Western District of Pennsylvania recently denied Kraft’s motion for summary judgment in a class action alleging the Kraft did not pay its employees proper overtime wages.  Judge Bissoon held that payment of overtime under the fluctuating workweek method, at one-half times an employee’s regular rate, as opposed to one and one-half times, was not in compliance with the Pennsylvania Minimum Wage Act.

Under a fluctuating workweek method an employee is paid a fixed, weekly salary, regardless of the number of hours worked.  Each week, an employee’s fixed salary is divided by the number of hours worked during the week in order to determine the employee’s regular rate of pay.  Because the fixed salary is meant to pay the employee upfront for some of their overtime, an employee is paid one-half their regular rate for every hour worked over 40 hours, instead of one and one-half times their regular rate.

Judge Bissoon explained that “a plain reading of [the Pennsylvania Minimum Wage Act] Section 231.43(d) requires Defendant to pay its employees in question at a ‘rate not less than 1 ½ times the rate established by the parties’ agreement or understanding as the basic rate.”  Kraft admitted that it paid its employees only one-half time for all hours worked in excess of 40 hours, which was consistent the fluctuating workweek method under the Fair Labor Standards Act.  The Court, however, held that “[h]ad the Pennsylvania regulatory body wished to authorize one-half-time payment under Section 231.43(d), it certainly knew how to do so.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

We previously blogged about the split among the Circuit courts and state court decisions regarding whether pharmaceutical sales representatives are outside sales employees and therefore exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). The Second Circuit held that they were not, but the Ninth Circuit held that they were. On April 16, 2012, the Supreme Court heard argument on the appeal of the Ninth Circuit’s decision and issued its opinion on June 18, 2012. In Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2161 (2012), the Supreme Court was faced with the question of whether the term “outside salesman,” as defined by the Department of Labor (“DOL”) regulations, encompasses pharmaceutical sales representatives whose primary duty is to obtain nonbinding commitments from physicians to prescribe their employer’s prescription drugs in appropriate cases.

The Petitioners worked as sales representatives for SmithKline Beecham and, as such, were responsible for calling on physicians in an assigned sales territory to discuss the features, benefits and risks of an assigned portfolio of their employer’s prescription drugs. Petitioners’ primary objective was to obtain a nonbinding commitment from the physician to prescribe their employer’s drugs in appropriate cases and the training Petitioners received underscored the importance of that objective. Christopher, 132 S. Ct. at 2164. Petitioners spent about 40 hours each week in the field calling on doctors during normal business hours of about 8:30 am to 5 pm. In addition, Petitioners spent an additional 10 to 20 hours each week attending events, reviewing product information, returning phone calls, responding to emails, and performing other miscellaneous tasks. Petitioners were not required to punch a clock or report their hours and they were subject to only minimal supervision. Petitioners were paid both a base salary and incentive pay based on the sales volume or market share of their assigned drugs in their assigned sales territories. Petitioners were not paid time and a half for time worked in excess of 40 hours per week. Id.

The DOL first announced its view that pharmaceutical detailers, like Petitioners, were not exempt “outside salesmen” in an amicus brief filed in the Second Circuit in 2009 and again in subsequent cases including in this case before the Ninth Circuit. Although the DOL’s position has remained unchanged, the reasoning in support of its position has changed. Initially, the DOL took the view that “a ‘sale’ for the purposes of the outside sales exemption requires a consummated transaction directly involving the employee for whom the exemption is sought,” but subsequently after the Supreme Court granted certiorari in Christopher, the DOL took the position that “[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.” Christopher, 132 S. Ct. at 2165-66.

The majority opinion written by Justice Alito, and joined by Chief Justice Roberts and Justices Thomas, Scalia and Kennedy, found the DOL’s interpretation of its regulations “quite unpersuasive” because the interpretation was inconsistent with the FLSA which defines “sale” to mean a “consignment for sale.” See Christopher, 132 S. Ct. at 2169. Relying on the phrase “other disposition” in the definition of a “sale,” the majority held that phrase included “those arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity.” 132 S. Ct. at 2171-72. Given their interpretation of “other disposition,” the majority concluded that it follows that Petitioners made sales for purposes of the FLSA and therefore are exempt outside salesmen within the meaning of the DOL’s regulations. 132 S. Ct. at 2172. Obtaining a nonbinding commitment from a physician to prescribe one of their employer’s drugs is the most Petitioners were able to do to ensure the eventual disposition of the products that their employer sells. This kind of arrangement, in the unique regulatory environment within which pharmaceutical companies must operate, comfortably falls within the catchall category of “other disposition.” Id.

The dissent, written by Justice Breyer and joined by Justices Ginsburg, Sotomayor and Kagan, disagreed that an independent examination of the language of the FLSA and related DOL regulations, required the conclusion that Petitioners were “outside salesmen.” See Christopher, 132 S. Ct. at 2175. The dissent considered Petitioners’ work to be more naturally categorized as involving “[p]romotional activities designed to stimulate sales … made by someone else,” e.g., the pharmacist or the wholesaler, than as involving “[p]romotional activities designed to stimulate” the detailer’s “own sales.” Id. at 2177. The important factor for the dissent was that Petitioners do not obtain binding commitments, and therefore they were not making “sales.” See id. at 2179.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In a case brought by Wal-Mart cleaning crew members – illegal immigrants who took jobs with contractors and subcontractors Wal-Mart engaged to clean its stores – the Third Circuit, for the first time, adopted a standard for final certification of collective actions. In Zavala v. Wal-Mart Stores, Inc., No. 11-2381 (3d Cir. Aug. 9, 2012), the Third Circuit affirmed the district court’s decertification of the collective action following discovery into the merits of the plaintiffs’ claims.

It is fairly well settled that two different standards apply for certification of the collective action under the FLSA, one for conditional certification and another for final certification. As the court noted in Zavala, conditional certification at the initial stages of the litigation requires only a “fairly lenient standard” and some courts “require nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy or plan.” However, the Third Circuit found that based on the statutory text of the FLSA, the standard to be applied on final certification is whether the proposed collective plaintiffs are “similarly situated.”

The Third Circuit approved an ad hoc approach adopted by other courts in which all relevant factors are to be considered to make a final determination on a case-by-case basis. Relevant factors to be considered in this analysis include (but are not limited to): whether the plaintiffs are employed in the same corporate department, division, and location; whether they advance similar claims; whether they seek substantially the same form of relief; and whether they have similar salaries and circumstances of employment. Plaintiffs may also be found dissimilar based on the existence of individualized defenses.

The Court resolved what no other Court of Appeals has directly done, answer the question as to the level of proof the plaintiffs must satisfy at final certification of collective actions. The Third Circuit held that the plaintiffs must satisfy their burden by a preponderance of the evidence. Applying this standard, the Third Circuit held that the plaintiffs in Zavala failed to satisfy the “similarly situated” standard.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

For many, Labor Day represents the beginning of football season or the last long weekend of the summer.  However, there’s more to Labor Day. It’s a celebration of American workers and their contribution to our success as a nation.

The first Labor Day was by some credible accounts celebrated in New York on September 5, 1882,  organized by the Central Labor Union of New York.  The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883.  In 1884, the Central Labor Union urged similar organizations in other cities to follow the example of New York and celebrate a “workingmen’s holiday” on that date.

The idea spread and in 1885 Labor Day was celebrated in many industrial centers of the country. It became a United States federal holiday only in 1894 (see the story behind that, below) and is observed on the first Monday in September.  According to the Department of Labor, Labor Day “is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.”

Labor Day was not legislated a federal holiday until 1894, in the days following a strike that began in Pullman, Illinois, a factory town established by George Pullman for workers who built the passenger rail cars that became ubiquitous on America’s burgeoning rail system. Pullman workers suffered decreased wages during the economic depression following the Panic of 1883, while working 16 hour days and paying undiminished rent for the Pullman owned housing they were required to inhabit and higher than market prices for the goods they purchased in Pullman factory stores. These conditions led to a wildcat strike of Pullman workers, soon joined by members of the national American Railway Union.

The Pullman Strike, involved some 250,000 workers across the country at its peak and was eventually broken by the U.S. military and U.S. Marshals. More than a dozen strikers were killed and dozens more wounded. But the American Railway Union succeeded in bringing national attention to the strength of the burgeoning labor movement and inspired improvements in laborers’ working conditions. President Grover Cleveland, aware of the growing power of the workers’ movement, immediately took a small step toward conciliation by asking Congress to establish the Labor Day holiday, and that was done only several days after the Pullman Strike ended.

Conditions did eventually improve, largely as a result of the labor movement.  According to the U.S. Department of Labor, the force of American labor has added materially to the highest standard of living and the greatest production the world has ever known. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation’s strength, freedom, and leadership — the American worker. More important, we should also hope that the present threat to that high standard of living can be reversed and use our best efforts to achieve that reversal.

Used with permission by Microsoft.

Under the current version of the Fair Labor Standards Act (the “FLSA”), workers that provide companionship services, including home health care workers, are exempt from wage and overtime compensation requirements (the “companionship exemption”).  On December 15, 2011, the United States Department of Labor proposed a rule that would extend minimum wage and overtime requirements to these workers.  During the comment period, the Department of Labor received 26,000 comments and approximately two-thirds of the comments were in favor of the rule.  If the proposed rule becomes final it will have a profound effect on around one million home health care workers across the country.  In New York City alone, one in seven low-wage workers is a home care worker.

However, on June 7, Senator Mike Johanns (R-NE), along with 12 other Republican Senators introduced the Companionship Exemption Protection Act (S. 3280), which would deny home health care workers the wage protections guaranteed in the rule proposed by the Department of Labor.  The Companionship Exemption Protection Act would define “companionship services” as “services which provide fellowship, care, and protection for individuals who, because of advanced age or physical or mental infirmity, are unable to care for themselves, including but not limited to…meal preparation, bed making, washing of clothes, errands…assistance with incontinence and grooming.”  Last September, a similar bill was introduced in the House of Representatives, but has not moved forward since it was refered to the Subcommittee on Workforce Protections.  In future blog posts, Abbey Spanier will provide updates on the progress of the proposed DOL rule and the pending bills.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Rewarding Wage Theft

Many banquet halls and catering establishments require customers to pay an additional “service charge,” often around 20 % of the total cost.  Can the establishments simply pocket the money or does this “service charge” belong to the servers?  In New York the current law is clear.  Section 196-d of the New York Labor Law forbids employers and their agents from “retain[ing] any part of a gratuity or of any charge purported to be a gratuity for an employee.”  In an Opinion Letter dated March 26, 1999, the Department of Labor (DOL) advised that

[i]f the employer’s agents lead the patron who purchases a banquet or other special function to believe that the contract price includes a fixed percentage as a gratuity, then that percentage of the contract price must be paid in its entirety to the waiters, busboys and “similar employees” who work at that function . . ..

In February of 2008, New York’s highest court, the Court of  Appeals, cited this Opinion Letter when it held that “[a]n employer cannot be allowed to retain” “mandatory charges . . . that employers represented or allowed their customers to believe . . . were in fact gratuities for their employees.  Samiento v. World Yacht Inc., 883 N.E.2d 990, 993 (N.Y. 2008).

Now, more than four years after the Samiento decision, and more than thirteen years after the DOL Opinion Letter, the New York Senate has passed a bill, S.6299-B, that would allow employers who illegally retained service charges in the past to keep the money.  The Assembly is considering a similar measure, A.09439-A.  The supposed rationale for this bill is an internal DOL memorandum written in 1995 that did not consider the “service charges” to be gratuities under Labor Law § 196-d.  As DOL Opinion Letter, RO-08-0107; RO-080111; RO-080129 (Dec. 1, 2008) noted, the “Opinion issued by the Department dated March 26, 1999 effectively superseded the 1995 memo.”

Even if employers felt that the law was unclear before the Samiento decision, after the decision on February 14, 2008, employers had no excuse for continuing to retain “service charges” instead of distributing them to their wait staff.  If this bill becomes law employees will be deprived of any means of obtaining the service charges that rightfully belong to them.  In addition, employers who scrupulously followed the law, causing them to appear to charge more than those employers who retained the service charge, will be put at a competitive disadvantage.  Instead of rewarding bad behavior, the Assembly and Gov. Cuomo should reject this misguided bill.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In McLean v. Garage Management Corp., Judge Denise Cote of the Southern District of New York reaffirmed the high standards an employer must meet in order to avoid liquidated damages under the Fair Labor Standards Act–holding that lessons learned from a previous government investigation into an employer’s pay practices may not permit an employer to avoid liquidated damages.

In McLean, the plaintiffs, who were current and former parking garage employees, brought claims against Garage Management Corp. (“GMC”) for violations of the FLSA and the New York Labor Law’s overtime provisions.  The plaintiffs worked in the position of Garage Manager and alleged that they were misclassified as exempt from the FLSA’s overtime requirements and denied overtime pursuant to the FLSA’s “bona fide executive exemption.”

After granting summary judgment in favor of the plaintiffs on liability, Judge Cote issued a separate opinion as to whether GMC acted in good faith, and whether its violation of the FLSA was willful for purposes of triggering the FLSA’s three-year statute of limitations.

Under the FLSA, liquidated damages (or double damages), as a general matter, are “the norm.”  In other words, if an employer is found to violate the FLSA, then the amount of back-pay owed to the employee is doubled.  However, an employer can avoid liquidated damages by proving that its actions were in “good faith” and that it had “objectively reasonable grounds” for believing its actions did not violate the FLSA.  The Second Circuit has held employers to a very high standard for making a good faith showing–they must prove good faith by “plain and substantial evidence.”  The employer must show that it took “active steps” to learn and comply with the FLSA.

In order to show good faith, GMC argued that it had been the subject of previous investigations by the US Department of Labor into its practices, and had learned about the requirements of the FLSA during those investigations.  However, Judge Cote was unimpressed; she held that “informal conversations” with government officials do not constitute the “active steps” required to show good faith under the FLSA.  Furthermore, Judge Cote noted that the previous investigation focused on Garage Attendants, not Garage Managers, and GMC had not given the department of labor all pertinent information about Garage Managers in connection with the previous investigation.

GMC also attempted to show good faith by highlighting that it periodically consulted with outside counsel.  However, Judge Cote held that an advice of counsel defense without a waiver of attorney client privilege–which GMC was unwilling to do here–could not pass muster.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Are You an Employee?

Recently the National Labor Relations Board (NLRB) has taken steps to protect the rights of employees, including those without a union, when they act collectively for mutual aid or protection.  As we reported in past posts the Board has determined that non-union employees have the right to bring class and collective actions to improve working conditions, even if their employer forced them to sign agreements that establish individual arbitration as the only method of resolving disputes about working conditions:  NLRB Finds Class Action Litigation Protected Activity Under NLRA and Chipping Away at Employees’ Right to Bring Class Actions.  The Board has also found that employers violate the National Labor Relations Act (NLRA) when they retaliate against employees who engage in social media discussions of job conditions with co-workers:  Employers Are Not Free to “Dis-Like.”

Wonderful as these protections sound you cannot be protected by these and other Board decisions if you are not an employee as defined by the NLRA.  The Act provides no protection to employees whom it defines to be supervisors, even if these individuals are protected by the FLSA because they spend only ten percent of their time performing supervisory functions or have no power to reward or discipline the employees whom they “supervise.”  Conversely the NLRA explicitly protects professional employees even if they are exempt from the overtime requirements of the FLSA.

Under the NLRA individuals are supervisors, and therefore unprotected, if they have the authority to perform any one of twelve functions, even if performing these functions is a very minor part of their job duties.  These functions, listed in section 2(11) are authority “to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action.”  As a result of the Supreme Court’s ruling on the interpretation of two of these functions – “assign” and “responsibly to direct” – in NLRB v. Kentucky River Community Care, Inc., 532 U.S. 706 (2001) and the NLRB’s subsequent decisions in a three related cases in 2006, Oakwood Healthcare Inc., 348 NLRB No. 37, Croft Metals, 348 NLRB No. 38, and Golden Crest Healthcare Center, 348 NLRB No. 39, many individuals are statutorily classified as supervisors merely because they have the authority to assign particular tasks even though they have no power to hire, fire, reward or discipline.

Recently Senators Richard Blumenthal, D-Conn., Tom Harkin, D-Iowa, and Dick Durbin, D-Ill., introduced legislation to protect those individuals without real supervisory power.  The bill, entitled the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers Act, or RESPECT Act, would remove “assign” and “responsibly to direct,” the two supervisory functions that do not involve actual managerial authority over co-workers from section 2(11) of the NLRA.  In addition individuals who spend less than half their time performing supervisory functions would not be defined as supervisors.  Thus the RESPECT Act would extend the protections of the NLRA to workers who need the protection because they have no real supervisory power in the workplace.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The California Supreme Court recently issued its long awaited decision in Brinker Restaurant Corp. v. The Superior Court of San Diego County, 2012 Cal. LEXIS 3149 (Cal. Apr. 12, 2012), in which it reversed the decision of the Court of Appeals and concluded that trial courts are not obligated as a matter of law to resolve threshold disputes over the elements of a plaintiff’s claims on a motion for class certification, unless particular determination is necessarily dispositive of the certification question. The Court also determined several threshold issues, upon the parties’ request, including the nature of an employer’s duty to provide meal periods. In addressing that issue, the Court concluded that an employer’s obligation is to relieve its employees of all duty, with the employees thereafter at liberty to use the meal period for whatever purposes he or she desires, but the employer need not ensure that no work is done. 2012 Cal. LEXIS 3149, at *8.

The court held that presented with a class certification motion, a trial court must examine the plaintiff’s theory of recovery, assess the nature of the legal and factual disputes likely to be presented and decide whether individual or common issues predominate. To the extent the propriety of certification depends upon disputed threshold factual or legal questions, a court may, and indeed must resolve them. Recognizing the problems that might arise as a result of the rule against one way intervention, the Brinker court cautioned courts to generally eschew resolution of such issues unless necessary. Therefore, the court held that it is not an abuse of discretion for a trial court to certify a class without deciding one or more issues affecting the nature of a given element if resolution of such issues would not affect the ultimate certification decision. 2012 Cal. LEXIS 3149, at *28.

In reviewing the issue of the scope of an employer’s duty to provide meal periods, the Brinker court concluded that an employer must relieve an employee of all duty for the meal period, but need not ensure that the employee does not work. 2012 Cal. LEXIS 3149, at *49. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. However, the Court held that work by a relieved employee during a meal break, does not create liability for premium pay by the employer. 2012 Cal. LEXIS 3149, at *64-65.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Used with permission from Microsoft.

On February 24, 2012, the Court of Appeals for the Seventh Circuit reversed a district court ruling denying class-action certification in an employment discrimination suit against brokerage firm Merrill Lynch. See McReynolds v. Merrill Lynch, Pierce, Fenner, & Smith. Case No. 11-3639, 2012 WL 592745 (7th Cir. Feb. 24, 2012). In doing so, Judge Posner distinguished the firm’s employment practices from those at issue in Wal-Mart v. Dukes. 131 S. Ct. 2541 (2011).

The plaintiffs represent a class of roughly 700 former and current employees who worked as brokers in Merrill Lynch’s branch offices. Plaintiffs claimed that two of Merrill Lynch’s management policies worked to discriminate against black employees in violation of Title VII of the Civil Rights Act of 1964. The first allowed brokers to choose to work on teams and to select their own team members. The second was to distribute accounts to brokers based on past performance, including team performance.

Although managers did not select teams, managers could veto the teams and rely on their performance in evaluating employees. Plaintiffs argued the policies had a disparate negative impact because, taken together, the policies caused black brokers to be excluded from certain business opportunities and to receive lower compensation.

The District Court for the Northern District of Illinois, Eastern Division, denied class certification in August 2010. The plaintiffs filed an amended motion for class certification in July 2011, following the Supreme Court’s decision in Dukes. The district court judge again denied certification. However, he opined that while Dukes was presumed to benefit the defendants, an appeal would help clarify how Dukes should apply to policies at issue in the case. See McReynolds 2012 WL 592745, at 11–12.

After the plaintiffs filed for leave to appeal, Merrill Lynch argued that the Circuit Court should refuse to hear the case because Rule 23(f) requires plaintiffs to file for leave within 14 days of a District Court’s ruling. Merrill Lynch argued that the plaintiffs forfeited their right to an appeal by not filing in August 2010, when the court first rejected class certification. However, the Circuit Court found that it retained jurisdiction over the matter and that it could not hold that “the failure to take a timely appeal from one interlocutory order operates as a forfeiture … of the right to appeal a subsequent order.” Id. at 7.

The Court then turned its attention to whether Dukes barred class-certification. The Supreme Court held in Dukes that discrimination by local managers would not “present a common issue that could be resolved efficiently in a single proceeding” in the absence of a company-wide policy. Id at 12. Merrill Lynch argued that Dukes was controlling in this case because “any discrimination here would result from local, highly-individualized implementation of policies rather than the policies themselves.” Id. at 17.

However, Judge Posner wrote that Merrill Lynch’s interpretation offered “too stark a dichotomy” and that the alleged impact was attributed to company-wide policies. While noting that Merrill Lynch’s policies may not be racially discriminatory, Judge Posner emphasized that the question “is whether the plaintiffs’ claim of disparate impact is most efficiently determined on a class-wide basis rather than in 700 individual lawsuits.” Id. at 18. While each plaintiff must “prove that his compensation had been adversely affected” it is not necessary to determine in each case “whether the challenged practices were unlawful” under Title VII. Id. 18–19.

Nicholas Turner is a third year law student at New York Law School. He is a Notes & Comments editor of Law Review and a John Marshall Harlan Scholar. Mr. Turner came in second in the 2011 ABA Torts, Insurance, and Compensation Law Section Writing contest. He was a 2011 Review Editor of the school’s Global Human Rights Bulletin. Mr. Turner is proficient in French.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm

Another case in the Seventh Circuit is helping define the limits of Wal-Mart v. Dukes. On March 2, 2012, the District Court for the Northern District of Illinois, Eastern Division, declined to decertify a class in an employment suit brought under the Illinois Minimum Wage Law (“the IMWL”). Driver v. AppleIllinois, LLC, Case No. 06 C 6149, 2012 WL 689169 (N.D. Ill. Mar. 2, 2012).

In doing so, the Court distinguished the legal standard used in Dukes from the standard applied to cases under the IMWL in order to find a common question applicable to the class.

The class at issue was one of three classes certified in the case in 2010, before the Supreme Court issued its Dukes decision. The class included Applebee’s employees who received tips in addition to less-than-minimum wages as defined under Illinois state law (“the class”). Members of the class alleged that the restaurant chain did not compensate them for performing additional duties that ordinarily were compensated at minimum wage, in violation of the IMWL.

Following the Supreme Court’s decision in Dukes, AppleIllinois moved to vacate the class’ certification, arguing that the class failed to demonstrate a common issue of law as required under Rule 23(b)(3) of the Federal Rules of Civil Procedure.

In denying the motion, the Court noted that Dukes dealt only with Rule 23(b)(2) and that “[t]he Supreme Court specifically noted that it did not consider whether the class could properly be certified under Rule 23(b)(3).” Id. at 4. In this case, the class’ claims under the IMWL were different from those in Wal-Mart because the Driver plaintiffs were not required to show “proof of discriminatory motive or intent.” Id. (citing Ross v. RBS Citizens, N.A., Case No. 10-3848, 2012 WL 251927 (7th Cir. Jan. 27, 2012)).

The Court explained that under the IMWL the plaintiffs needed only to show that there was an “official or unofficial” practice of requiring employees to perform duties that were not properly recorded and compensated. Driver, 2012 Wl 689169, at 6. Unlike in Dukes, which focused on the discretion given to individual managers, the class in Driver did present “a common question: whether AppleIllinois required its tipped employees to engage in duties unrelated to their tipped occupation without paying them at the minimum wage rate.” Id. at 5.

Moreover, the Court rejected AppleIllinois’ argument that assessing damages for the class would require the “trial by formula” discouraged in Dukes. Id. at 7. Rather, the Court noted that the plaintiffs should be able to rely on the employer’s records to arrive at a precise measure of individual damages.

Driver is the latest in a series of cases from the Seventh Circuit to explore the application of Dukes to employment disputes. For litigants in the Seventh Circuit, the lesson is that Dukes may only apply to cases where discriminatory intent is an aspect of the underlying claim. See Ross, 2012 WL 251927. That is good news for class-action plaintiffs whose claims may arise udner a variety of statutes.

Nicholas Turner is a third year law student at New York Law School. He is a Notes & Comments editor of Law Review and a John Marshall Harlan Scholar. Mr. Turner came in second in the 2011 ABA Torts, Insurance, and Compensation Law Section Writing contest. He was a 2011 Review Editor of the school’s Global Human Rights Bulletin. Mr. Turner is proficient in French.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm

Used with permission from Microsoft.

Certain states require paid rest periods for employees , but the federal law does not. Under The Fair Labor Standards Act (“FLSA”), the federal law that sets minimum wage and overtime pay in the private sector for full-time and part-time workers and in federal, state, and local governments, there is no provision for paid rest breaks.

California, Colorado, Kentucky, Nevada, Oregon, and Washington require 10 minute rest periods for each 4 hours worked, depending on the type of work you do. If you live in California, for example, professional actors and sheepherders are out of luck. Minnesota provides for an “adequate rest period” every 4 hours to use the restroom and Vermont requires that its employees be given “reasonable opportunities” to use the restroom (making you wonder about the expectations of other states that have no such specific provisions). In Illinois, hotel room attendants in counties of over 3 million people are entitled to two 15-minute breaks in each workday of at least seven hours or more.

Are you receiving the paid rest breaks to which you are entitled?

Imagine, for a moment, that a company told its employees that they could not record overtime hours, even if they were eligible for overtime compensation. Not exactly the nicest thing to do, right? Now imagine this company also forced its employees to work through unpaid breaks, and offered them “comp time” instead of overtime pay in return. Angry yet? What if the company also had a policy of erasing its employees’ logged overtime hours? Sounds like the sort of thing that went extinct after the laissez-faire, pre-union 1920s, right? Surely, that’s something we wouldn’t see over three-quarters of a century later, in the “enlightened” 21st century?

Sadly, this is exactly what is alleged in Ross  v. RBS Citizens. In Ross, employees at Charter One Bank have alleged that Charter One had a company policy of doing all of those things mentioned above to avoid paying them overtime. In 2007, too!

Luckily, in this day and age, they have a remedy. Such conduct violates the Fair Labor Standards Act and the Illinois Minimum Wage Law (indeed, it’s similar to the FLSA claims from personal bankers we wrote about in Winfield v. Citibank earlier this month) and the employees were able to file a class action to force Charter One to pay them the overtime they were due. They were even able to win class certification, which is typically the point at which they gain enough leverage to force a very favorable settlement.

To try to prevent this from happening, the defendants appealed the certification order, claiming that the district court didn’t adequately define the classes and class claims under Federal Rule of Civil Procedure 23(c)(1)(B). This rule requires that “[a]n order that certifies a class action must define the class and the class claims, issues, or defenses.” This is an uncommon avenue to challenge a class certification, as it essentially asserts that the district judge didn’t write clearly or reason effectively in their certification order. And, of course, intimating such things about the judge who hears your case isn’t such a great idea, really.

This sort of claim is so uncommon, in fact, that the Seventh Circuit could could only find a single prior case on this issue: Wachtel ex rel Jesse v. Guardian Life Insurance Co. of America, in the Third Circuit. In Wachtel, the Third Circuit interpreted the 23(c)(1)(B) requirement as essentially asking “whether the precise parameters defining the class and a complete list of the claims, issues, or defenses . . . are readily discernible from the . . . certification order itself or of an incorporated memorandum opinion.” The Seventh Circuit found this interpretation persuasive, and, applying it in Ross, found that the district court’s certification order and memorandum opinion were precise and specific enough to meet both 23(c)(1)(B) requirements.

Indeed, reading the Seventh Circuit’s opinion, one gets the impression that the circuit court didn’t think much of the defendants’ 23(c)(1)(B) challenge. The court repeatedly mentioned District Judge Lefkow’s “well-reasoned seventeen-page opinion” and found that it, when combined with the certification order, “leaves no doubt” as to which employees and former employees fell within the classes certified. The Seventh Circuit also disposed of the defendants’ attempt to discredit the certification order by raising seven additional questions that the court “should have addressed.” The court noted that the issues raised were “questions of trial strategy or proof” and that if the Rules required “a district court to list any possible method of proof . . . the length of such an order would border on the absurd.”

In addition to the 23(c)(1)(B) concerns, this case joined the growing number of employment class action cases that distinguish or do not apply the Supreme Court’s rulings on commonality in Wal-Mart Stores, Inc. v. Dukes. In Ross, both parties were asked to argue whether or not Dukes’ interpretation of the 23(a)(2) commonality requirement would require overturning the certification order. This commonality prerequisite requires that there be “questions of law or fact common to the class,” and has been interpreted to require that the plaintiff show that class members have “suffered the same injury.”

The Seventh Circuit distinguished Ross from Dukes, finding that there was sufficient commonality in the class claims and injuries to support certification. In Dukes, 1.5 million Wal-Mart employees suing as a class were unable to show sufficient proof of a uniform policy of gender discrimination or commonality in the injury suffered as a result. Rather, the Dukes plaintiffs were only able to show that Wal-Mart had a policy allowing discretion in hiring and compensation decisions, which the Supreme Court noted “is just the opposite of a uniform employment practice that would provide the commonality needed for a class action.”

In contrast, the overtime policy at issue in Ross was just that: a “uniform employment practice” that denied these employees their rightful overtime compensation. As a result, the Seventh Circuit declined to extend Dukes and upheld the district court’s class certification.

This makes sense, both legally and intuitively. Even if the employees had been denied overtime through different methods (such as by forcing the employee to work through a break or by erasing their recorded overtime hours), all of the class members were subject to the same policy and suffered the same denial of overtime pay. I mean, if that’s not “commonality,” I don’t know what is!

Joshua Druckerman is a second-year student at New York Law School and a member of its Law Review

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm

Used with permission from Microsoft.

Recently we posted in NLRB Finds Class Action Litigation Protected Activity Under NLRA that employees’ right to pursue litigation collectively in a class action had been upheld by the National Labor Relations Board (NLRB).  Unfortunately, although the D.R. Horton , Inc. decision was issued only a month ago, already a district court in California has provisionally acted to limit the scope of the decision.

Fatemah Johnmohammadi brought a class action against Bloomingdale’s Inc. asserting violations of California wage laws.  Bloomingdale’s responded by removing the case to federal court and moving to compel non-class arbitration based on an agreement that Johnmohammadi had signed as part of her initial paper work when she started working for Bloomingdale’s.  Unlike D.R. Horton, Bloomingdale’s allowed employees to choose to opt out of the arbitration agreement if they did so within thirty days.  Bloomingdale’s even purports to keep the information on who opts out confidential so that managers cannot retaliate because they do not know who has chosen to opt out.  U.S. District Judge George H. Wu provisionally ruled that the voluntary nature of the arbitration agreement made it enforceable.  Johnmohammadi v. Bloomingdale’s Inc., case number 11-cv-6434, in the U.S. District Court for the Central District of California.  In addition to opposing the motion in court Johnmohmmadi has filed an unfair labor practice charge with the NLRB.

While the NLRA is often thought of as dealing exclusively with issues relating to unionization, Section 7 of the National Labor Relations Act (NLRA) also protects the right of employees who are not members of a union to engage in “concerted activities” for the purpose of “mutual aid or protection.”  In D.R. Horton, Inc. the NLRB recognized, “Employees are both more likely to assert their legal rights and also more likely to do so effectively if they can do so collectively.”  357 N.L.R.B. No. 184 (2012).  This is because employees face the risk of retaliation from their employers when they engage in litigation to improve their working conditions.

One of the basic underpinnings of the NLRA is Congress’s recognition of the “inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract and employers who are organized in the corporate or other forms of ownership association.”  29 U.S.C. § 151.  Most new hires do not have legal advice to enable them to fully understand the rights they are agreeing to forgo when they sign an individual arbitration agreement with their employer.  Even those employees who know that they are signing away their rights may have reason to distrust an employer’s promise of confidentiality and fear retaliation for failure to sign.

The NLRA was enacted to protect public rights.  In the context of voluntary individual employment contracts that were used to delay bargaining with a union, the Supreme Court declared that “[w]herever private contracts conflict with [the NLRB’s mandate] they obviously must yield or the Act would be reduced to a futility.”  J.I. Case Co. v. NLRB, 321 U.S. 332, 337 (1944).  Similarly, individual employment contracts that prevent an employee from engaging in concerted activity, including pursuing legal claims in a class or collective action, expressly conflict with the NLRA and therefore should not be enforceable.  Hopefully, when Judge Wu issues his final ruling he will allow Johnmohmmadi’s class action to proceed.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm. 

Recently, a federal judge held that it was not discrimination for an employer to fire a woman because she wanted to pump breast-milk while at work. In Equal Employment Opportunity Commission v. Houston Funding II, Ltd., et al, the plaintiff alleged that she was fired because she wanted to pump breast- milk when she returned to work two months after the birth of her child. Her employer claimed that she was fired for abandoning her job. Although, the court recognized that discrimination because of pregnancy, childbirth, or a related medical condition (including cramping, dizziness and nausea while pregnant) is illegal, Judge Lynn Hughes found that even if the company’s claim that she was fired for abandonment was meant to hid the real reason – she wanted to pump breast-milk – lactation is not pregnancy, childbirth or a related medical condition. The court explicitly stated that firing someone because of lactation or “breast-pumping” is not sex discrimination.

Although, federal law still does not specifically protect women from being fired if they ask to pump breast milk at work, the Fair Labor Standard Act (the “FLSA”) was recently amended to provide employees some protections if they wish to pump while at work. However, the Patient Protection and Affordable Care Act which was passed as an amendment to the FLSA, applies only to employees who are covered by the FLSA.
The new law, called Break Time for Nursing Mothers, requires companies with at least 50 employees to provide women with reasonable time and a private space—not a bathroom—to pump milk until their baby is a year old. The law does not spell out how much time is reasonable, nor whether that private space should include, for example, a lock on the door or a refrigerator to store milk. Employers are not required to compensate employees for pump breaks unless they offer unpaid breaks for other reasons, such as lunch. In addition to protection by federal law, employees may have protection under state law. Twenty-four states, the District of Columbia and Puerto Rico have laws related to breastfeeding in the workplace. (Arkansas, California, Colorado, Connecticut, Georgia, Hawaii, Illinois, Indiana, Maine, Minnesota, Mississippi, Montana, New Mexico, New York, North Dakota, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington and Wyoming.)

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In a recently unsealed ruling, Winfield v. Citibank, U.S. District Judge John G. Koeltl granted conditional class certification, pursuant to Section 216(b) of the Fair Labor Standards Act (the “FLSA”), to a nationwide class of “personal bankers” who alleged that their employer Citibank failed to pay them the FLSA overtime rate.

The plaintiffs alleged that Citibank had a “dual-edged policy” concerning payment of overtime, essentially forcing the personal bankers to work overtime but not paying them for it. Essentially, Citibank required its personal bankers to choose between the lesser of two evils: the bankers alleged that Citibank strictly limited the number of overtime hours they could work, but then encouraged “Personal Bankers to work overtime by requiring them to meet strict sales quotas that could not reasonably be accomplished in a forty-hour work week.” As a result, personal bankers who worked over forty hours per week were not paid proper overtime rates under the FLSA. The personal bankers submitted evidence showing that Citibank had a disciplinary policy governing failures to meet quotas, and that the disciplinary policy was instituted on a nationwide basis.

Section 216(b) of the FLSA allows a group of employees who are “similarly situated” with respect to the FLSA violations they allege to band together and bring a collective action against their employer. The standard for determining whether employees are similarly situated requires only a minimal showing, and motions for collective action certification are usually made at a very early stage of the litigation.

In this action, Citibank opposed conditional certification on several grounds. Citibank argued that the personal bankers were not “similarly situated” because they had not alleged a common policy that violated the law: Citibank’s limitation on overtime hours was lawful. However, Judge Koeltl pointed out that a lawful policy may nonetheless be actionable if it is implemented in an unlawful way.

Here, the personal bankers had alleged that the limitation on overtime–lawful in and of itself–was actionable due to its combination with encouragement by Citibank branch managers to work overtime to meet sales quotas and the subsequent refusal to pay overtime. One plaintiff testified that “[My Branch Manager] said that I needed to do whatever it took to meet my goals. That Regional was not approving overtime, and that even if I work overtime, I was not allowed to put it on the sheet.” Other plaintiffs testified similarly. The court cited to multiple emails by Citibank managers showing that the “dual-edged policy” of setting high quotas and not paying overtime necessitated by those high quotas was not simply a rogue policy implemented by a few. In these emails, the managers acknowledged that pressure was coming from higher up in the organization. Some of the managers had told the personal bankers that the dual-edged policy was dictated to them by regional management.

Among other arguments, Citi moved to strike some of the personal bankers’ declarations and testimony as hearsay. In particular, Citibank argued that the statements concerning regional management’s dictation of policies was inadmissible at trial and therefore could not be used to support conditional certification. However, Judge Koeltl noted that courts frequently allow hearsay to support a motion for conditional certification due to the preliminary nature of such a motion. Judge Koeltl denied Citibank’s motion to strike without prejudice.

Judge Koeltl also joined a growing number of courts that have rejected application of Wal-Mart v. Dukes to motions for conditional certification under the FLSA. Judge Koeltl noted that Dukes was decided under the more stringent standards of Rule 23, rather than the minimal standards of FLSA Section 216(b) which require only that all employees be “similarly situated.” In Wal-Mart, the Supreme Court took issue with the allegations of a single employee who sought to represent a nationwide class of employees against whom Wal-Mart had allegedly discriminated. In Wal-Mart, the Supreme Court held that a plaintiff must show that his or her claims can be proven by reference to a common policy.
Judge Koeltl held that the plaintiffs’ testimony concerning statements from regional management, as well as the overtime and quota policies Citibank had in place, had sufficiently shown, for purposes of 216(b), that the plaintiffs were subject to a “common policy or plan that violated the law.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

On January 3, 2012, in Pippins v. KPMG LLP, 2012 U.S. Dist. LEXIS 949 (S.D.N.Y. Jan. 3, 2012), U.S. District Judge Colleen McMahon issued an order conditionally certifying a national collective action against KPMG LLP, one of the “Big-Four” accounting firms. Last year, the plaintiffs brought a lawsuit alleging that KMPG misclassified thousands of current and former entry-level audit associates as exempt and failed to pay them overtime in violations of the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. § 201 et seq., and under the New York Labor Law, Article 19 § 650 et seq.

The FLSA requires employers to pay their employees overtime wages which are calculated at a rate of “one and one-half times the regular rate” for each hour worked in excess of 40 hours per week, 29 U.S.C. § 207(a)(1). This requirement is subject to certain exemptions. For example, the FLSA’s overtime protections do not apply to individuals “employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). In Pippins, KPMG argues that audit associates fall under this exemption.

Section 216(b) of the FLSA, creates a private right of action to recover unpaid overtime compensation, and provides that employees may pursue their claims collectively. The collective action procedure is designed to promote the “‘efficient adjudication of similar claims,’ so that ‘similarly situated” employees may pool resources to prosecute their claims.” In her decision, Judge McMahon did not weigh the merits of plaintiffs’ underlying claims but determined that they had satisfied the FLSA’s “similarly situated” requirements for conditional certification because all audit associates at KPMG were subject to the same job duties/responsibilities, pay provisions, policies and procedures regarding the performance of their duties and received the same training. Recognizing these similarities, the Court held that it would be “shocking” not to find that KPMG audit associates met the low threshold for certification of an FLSA collective action.

Because Federal Rule of Civil Procedure 23’s requirements for class certification do not apply to the certification of a collective action under the FLSA, the Court emphasized that the Supreme Court’s seminal decision in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), is inapplicable in the FLSA context:

[N]othing in Dukes speaks to an FLSA case, where it is well-established that Rule 23’s requirements do not apply, and conditional certification is predicated on the substantial similarity of class members’ job situations, rather than on showings of numerosity, commonality, and typicality.

In granting the order, the Court concluded that, “Plaintiffs have made the required modest showing that they were subject to certain wage and hour practices at their workplace and, to the best of their knowledge, and on the basis of their observations, their experience was shared by members of the proposed class.”

Judge McMahon has ordered that “discovery relating to the issue of why all Audit Associates are classified as exempt, without regard to their personal situations, be conducted on an expedited basis, with an eye to having someone (probably Plaintiffs) move for summary judgment no later than April 27, 2012.” Abbey Spanier will continue to watch this case for any new developments.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

The National Labor Relation Board’s (NLRB) recent ruling in D.R. Horton Inc. answered an important question presented by the U.S. Supreme Court’s ruling last Spring in AT&T Mobility LLC v. Concepcion: does federal policy favoring arbitration apply equally in the consumer and employment contexts?

The NLRB’s response was an emphatic “no,” largely agreeing with arguments advanced by dozens of organizations, including the National Employment Lawyers Association (NELA), dedicated to representing individuals who often cannot safeguard their fundamental labor protections in the workplace without class or collective actions.

Although Concepcion arose in the consumer context, some have construed the Supreme Court’s ruling broadly as stating the Court’s approval of forced arbitration provisions in other contexts, including the employment context. Indeed, the Arbitration Fairness Act, which was first proposed in 2009, was reintroduced in response to the Concepcion ruling and, if passed, will eliminate forced arbitration clauses in consumer, employment and civil rights contexts. As we wrote here last year, Abbey Spanier, LLP supports this legislation.

The particular contractual provision at issue in D.R. Horton required plaintiff and other D.R. Horton Inc. employees to agree, as a condition of employment, that they would not pursue class or collective litigation of claims in any forum, arbitral or judicial. Although the general intent of the Federal Arbitration Act (FAA) manifests a liberal federal policy favoring arbitration agreements, the NLRB found that such a provision runs afoul of the National Labor Relations Act (NLRA).

The NLRA is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions, engage in collective bargaining and take part in strikes and other forms of concerted activity in support of their demands. The NLRA does not apply to workers who are covered by the Railway Labor Act, agricultural employees, domestic employees, supervisors, federal, state or local government workers, independent contractors and some close relatives of individual employers.

In ruling against D.R. Horton Inc., the NLRB concluded that “employees who join together to bring employment-related claims on a class-wide or collective basis in court or before an arbitrator are exercising rights protected by Section 7 of the NLRA,” which provides employees with the right “to engage in… concerted activities for the purpose of collective bargaining or other mutual aid or protection” (29 U.S.C. § 157) and that such “forms of collective efforts to redress workplace wrongs or improve workplace conditions are at the core of what Congress intended to protect by adopting the broad language of Section 7.” Slip Op., p.3.

Likewise, the NLRB found that the prohibition of individual agreements imposed on employees as a means of requiring that they waive their right to engage in protected, concerted activity lies at the core of the prohibitions contained in Section 8, which makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise” of such right (29 U.S.C. § 158(a)(1)). Slip Op., p.5.

The NLRB decision provides a lengthy discussion of the FAA and the Supreme Court precedent, including Concepcion, which you can read in full here, but explains why D.R. Horton seems to diverge as follows: it “rests not on any conflict between an agreement to arbitrate and the NLRA, but rather solely on the conflict between the compelled waiver of the right to act collectively in any forum in an effort vindicate work-place rights and the NLRA.” Slip Op., p.13.

The NLRB got it right and, in our view, restored some order to a corner of jurisprudence cast into disarray Concepcion. To have reached any other result, as the U.S. Supreme Court has recognized, “could frustrate the policy of the [NLRA] to protect the right of workers to act together to better their working conditions.” Eastex, Inc. v. NLRB, 437 U.S. 556, 567 (1978).

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In recent years, New York has received attention for its application of Section 196-d of the Labor Law, which prohibits employers from retaining a gratuity or a charge that purports to be a gratuity. In a 2008 decision, Samiento v. World Yacht Inc., 10 N.Y.3d 70, 79 (N.Y. 2008), the Court of Appeals held that a mandatory service charge may be viewed as a gratuity owed to employees within the meaning of Section 196-d.

However, New York is not the only state with such a law. The Minnesota Fair Labor Standards Act (the “MLFSA”) states that “any gratuity received by an employee . . . is the sole property of the employee.” Like New York, Minnesota law says that mandatory charges may purport to be a gratuity, and cannot be kept by the employer.

Unlike New York’s judge-made law on mandatory charges, Minnesota has a specific regulation that provides that “obligatory charges which might reasonably be construed by the guest, customer, or patron as a sum to be given to the employee as payment for personal services rendered, include, but are not limited to, service charges, tips, gratuities, and/or surcharges which are included in the statement of charges given to the customer.”

In Luiken v. Domino’s Pizza, LLC, Civil No. 09-516 (DWF/TNL), 2011 U.S. Dist. LEXIS 135780 (D. Minn. Nov. 14, 2011), Judge Donovan W. Frank granted a motion for class certification in an action brought by two Domino’s Pizza delivery drivers who alleged that Domino’s retained a $1.00 “delivery charge”, in violation of the MFLSA. The drivers alleged that the “delivery charge” might reasonably be construed by the customer as a sum to be given to the employee who was delivering the pizza.

In opposing class certification, Domino’s argued that common proof would not predominate over individualized proof because an examination must be made into the facts of each transaction. Domino’s argued that each customer’s experience was different, and inquiry must be made into whether a customer had previously ordered from Domino’s, as well as the size of the order the customer made, and whether the customer had any discussions with Domino’s employees about the delivery charge.

Judge Frank dismissed Domino’s argument as “not dispositive” on a class certification motion. Rather, the plaintiffs had shown that the claims of all class members “result from the same alleged injury and are based on the same legal theory: that Domino’s violated the MLFSA by unlawfully retaining delivery driver gratuities as prohibited by the statute.”

Moreover, Judge Frank appeared to recognize that a claim for unlawful retention of mandatory charges is not based on a subjective analysis, but rather is objective, stating: “The Court finds that this claim—including the underlying contention that customers might reasonably have construed the delivery charge as payment to Domino’s delivery drivers for personal services rendered—is capable of classwide resolution. The Court further notes that whether the fact-specific circumstances articulated by Domino’s resulted in a customer’s actual belief that the delivery charge was not a tip for the delivery driver is not an issue the Court will be tasked with deciding.”

The Luiken decision may be persuasive to other courts deciding class certification. Like the MFLSA, the New York Court of Appeals has held that the question of whether a charge purports to be a gratuity is objective, and is to be measured by what a reasonable customer would believe. Although few class certification decisions have been rendered on Section 196-d claims since World Yacht, those courts that have faced the issue have recognized that the Court of Appeals’ reasonable patron test “obviate[es] the need to closely examine each individual customer’s frailties or idiosyncrasies.” Spicer v. Pier Sixty LLC, 269 F.R.D. 321 (S.D.N.Y. 2010). This objective standard should eliminate an argument frequently used by defendants in opposition to class certification: that individual inquiries must be made into each customer’s state of mind.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm with a concentration in employment law.

On November 16, 2011, in Espinoza v. 953 Associates LLC, U.S. District Judge Scheindlin issued an Opinion and Order certifying a class of “current and former employees of The Eatery restaurant”. Plaintiffs and the class allege that defendants, The Eatery and Whym restaurants failed to pay minimum wages, overtime and improperly withheld tips earned. In certifying the class, Judge Scheindlin distinguished the recent Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes.

In Dukes, approximately 1.5 million female employees sought class certification alleging wage and gender discrimination against Wal-Mart. The Supreme Court held that in order to satisfy the commonality requirement under Rule 23(a), the common claim among class members must be “capable of class wide resolution” of an issue “central to the validity of each one of the claims in one stroke.” The Court held that the commonality requirement could not be satisfied because plaintiffs’ claims would “require analyzing millions of subjective employment decisions” rather than specific policies or practices to which each claimant was subjected.

In distinguishing Dukes, Judge Scheindlin held that plaintiffs and class allege a common injury resulting from the implementation of the same policies and practices at The Eatery, thereby making it capable of class wide resolution. Judge Scheindlin also noted that any individualized questions in the action went to the differences in damages rather than determining the liability of Defendants, and therefore, common questions predominated over individual claims.

The heart of Judge Schiendlin’s decision is that the Court was satisfied by plaintiffs’ allegations that Defendants had specific policies and practices regarding lunch breaks and clock out times. Plaintiffs testified, and former Eatery manager Christopher Taub corroborated, that an hour-long “lunch break” was deducted from an employee’s paycheck each day they worked, although employees rarely took breaks longer than ten minutes. In addition, Taub testified that he was required to alter the number of hours worked by each employee in the computer system. The Court held that “[p]laintiffs have alleged a common injury that is capable of class-wide resolution without inquiry into multiple employment decisions applicable to individual class members” accordingly Dukes is distinguishable and does not preclude class certification for current and former employees of The Eatery.

Nonetheless, Judge Scheindlin refused to certify the class of employees who worked exclusively at Whym finding that plaintiffs failed to establish that that Whym exercised similar employment policies regarding lunch and clock out times.

Although the Court narrowed the definition of the class, the certification is a victory for plaintiffs. In reaching its decision, the Court noted the value of the class actions by explaining that class certification would “promote judicial economy by avoiding as many as 150 to 200 separate Labor Law actions”.

Veronica N. Valladares is a third year law student at New York Law School. She is a member of the Law Review and her activities include volunteering for the National Lawyers Guild Immigration Rights Project and being a student advocate at the law school’s Unemployment Action Center. Ms. Valladares is fluent in Spanish.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Used with permission from Microsoft.

On November 14, 2011, U.S. District Judge Donovan W. Frank issued a Memorandum and Order certifying a class of “all persons who worked as Domino’s Pizza, LLC delivery drivers in Minnesota from March 6, 2006 through February 28, 2010.”

In their complaint, the plaintiff delivery drivers allege that all corporate owned Domino’s stores in Minnesota charged pizza delivery customers $1.00 (later increased to $1.50) as a delivery charge on the receipt provided to customers. Despite requiring plaintiffs to pay their own gas, maintenance and other driving related expenses, Domino’s never paid any portion of the delivery charge to its delivery drivers. Plaintiffs allege that Domino’s failure to adequately reimburse drivers for their travel-related expenses resulted in plaintiffs being paid less than the minimum wage under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”) and the Minnesota Fair Labor Standards Act, Minn. Stat. 177.21, et seq. (“MFLSA”).

After the Court denied Domino’s motion to dismiss in August 2009, plaintiffs moved for class certification based on their claim under the MFLSA.  The MFLSA states that “any gratuity received by an employee . . . is the sole property of the employee.” See Minn. Stat. § 177.24, subd. 3.  The statute prohibits an employer from requiring an employee to contribute or share gratuities received by the employee with the employer or other employees. See id.

The MFLSA defines “gratuities” as: “monetary contributions received directly or indirectly by an employee from a guest, patron, or customer for services rendered and includes an obligatory charge assessed to customers, guests or patrons which might reasonably be construed by the guest, customer, or patron as being a payment for personal services rendered by an employee and for which no clear and conspicuous notice is given by the employer to the customer, guest, or patron that the charge is not the property of the employee.”  Minn. Stat. § 177.23, subd. 9.

Plaintiffs argued that the delivery charge constituted an obligatory charge assessed to the customer which might reasonably be construed as being a payment for personal services rendered, and for which Domino’s gave no clear and conspicuous notice to the customer that the charge was not the property of the delivery drivers.

In its class certification briefing, Domino’s argued that plaintiffs failed to meet the commonality and typicality requirements of Rule 23(a) because consideration of the particular facts and circumstances surrounding each delivery was necessary to resolve the question whether a customer might reasonably have construed the delivery charge to be a payment to the delivery driver for personal services rendered. For example, Domino’s argued that relevant differences in customer experience include: whether the customer ordered over the phone or online; whether the customer paid by cash or credit card; the frequency with which the customer ordered delivery pizza; the size of the order; the location of the store at which the order was made; and the customer’s interaction with Domino’s employees.

Judge Frank disagreed with Domino’s arguments: “Such considerations are not dispositive for purposes of the present motion. Rather, the central inquiries are: whether the proposed class members have suffered the same alleged injury; whether the claims of the proposed class depend upon a common contention; whether that common contention is capable of classwide resolution; and whether Plaintiffs’ claims and those of the proposed class are based on the same legal theory. Although all proposed class members may not be identically situated, the Court concludes that Plaintiffs’ claims and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence. The claims of the proposed class in this case result from the same alleged injury and are based on the same legal theory: that Domino’s violated the MFLSA by unlawfully retaining delivery driver gratuities as prohibited by the statute. See Minn. Stat. § 177.23, subd. 9.”

Noteworthy is Judge Frank’s recognition of the utility of class actions. He observed: “Furthermore, a class action fosters judicial economy. Certifying this class may resolve the claims of 1400-1600 potential plaintiffs. Additionally, a class action helps to ensure that class members who are otherwise unaware that they possess a claim, or are unable to hire a lawyer, will have their rights represented.”

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Even if your employer has declared bankruptcy it still may have violated the Worker Adjustment and Retraining Notification Act (the “WARN Act”) when it failed to give required and timely notice of a mass termination of employees.

The WARN Act offers protection to workers by requiring employers to provide 60 days advance written 60 days of covered plant closings and covered mass layoffs. In general, employers are covered by The WARN Act if they have 100 or more employees. The failure to comply with the WARN Act gives rise to potential civil actions by employees for damages in the form of back pay for each day of violation and benefits under any employee benefit plan which would have been covered under an employee benefit plan if the employment loss had not occurred.

While the WARN Act itself does not make reference to bankrupt employers the Department of Labor’s rule promulgated thereunder interpreting the statute declined to exclude bankruptcy “fiduciaries” from the WARN Act’s definition of employer. Instead the Department suggested that “a fiduciary whose sole function in the bankruptcy process is to liquidate a failed business for the benefit of creditors does not succeed to the notice obligations of the former employer … [but] where the fiduciary may continue to operate the business for the benefit of creditors, the fiduciary would succeed to the WARN obligations of the employer.”

In In re United Healthcare System, Inc., 200 F.3d 170 (3rd Cir. 1999), the Third Circuit found that a debtor-hospital which had filed a Chapter 11 petition in the Bankruptcy Court sixteen days earlier was a “liquidating fiduciary” at the time it laid off 1,200 of its 1,300 employees. The court found that the debtor-hospital was not a “business enterprise” under the WARN Act at the time of the layoff and thus not liable for back pay to employees under the WARN Act for having failed to give its employees 60 days’ notice.

The court in In re Jamesway Corporation, 235 B.R. 329 (Bankr. S.D.N.Y. 1999), likewise recognized that the status of “liquidating fiduciary” could relieve a debtor-in-possession from WARN Act liability, but nevertheless found the retailer liable under the WARN Act because, six days prior to filing its Chapter 11 petition in the Bankruptcy Court, it had 1) decided to liquidate, 2) identified all of the employees who would lose their jobs in the layoff, 3) determined the schedule of terminations in the layoff, and 4) commenced terminating employees as part of the layoff. Based on these facts, the Court found that the employer was liable under the WARN Act prior to the Chapter 11 filing because the employees became entitled to notice of the termination of their employment at the time of these events.

Abbey Spanier, LLP is investigating whether MF Global’s mass termination of employees violated the WARN Act.  If you want to know more about our investigation please contact me.

The Movement to End Wage Theft

In 1937, President Franklin Roosevelt proposed the first national minimum wage law, to “end starvation wages” and to guarantee America’s “men and women a fair day’s pay for a fair day’s work.” Nevertheless, today, almost 35% of all Americans, many working at one or more jobs, remain poor. According to a new report: “A Fair Day’s Pay: The Movement to End Wage Theft”, Nik Theodore, an Associate Professor at the University of Illinois, October 2011, the scale of the abuse is enormous in economic terms and it does not only afflict undocumented workers, who are vulnerable because of their immigration status. It also affects other immigrants and U.S.-born workers who fear that if they complain about their lost wages, they will be fired and will never get a chance to collect their due.

The report which was commissioned by the Discount Foundation examines over a dozen examples of organizations utilizing innovative tactics to combat this illegal practice. The Discount Foundation is a small private foundation concerned with large social and economic problems. According to its website, Discount’s “primary goal is to make economic opportunity, the “American Dream” for generations of the poor, including immigrants, a reality for all.”

The report contains stories of both individual workers and the organizations they belong to, which are fighting this problem successfully. These organizations include the National Employment Law Project (“NELP”) and the Interfaith Worker Justice. Since 2009, the Department of Labor has added 300 new investigators. As a result of greater enforcement by the DOL, employers agreed to pay $313 million in back wages to 517,000 workers between 2009 and 2011.

Legislation has been drafted, proposed and enacted across the country to strengthen wage theft laws. We support these efforts and the effort of NELP and other organizations fighting for the rights of individual workers to earn a fair days pay.

We will fight for your right to be paid what you are entitled to.

If you believe your employer has failed to pay you overtime or minimum wage, or has wrongfully withheld gratuities from you, please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

In a previous post, “Taking Your Rights Away with a Single Click,” we discussed the important function class actions serve and the harm caused by courts that have enforced contractual class action waivers. Employees who have been required to sign employment agreements that include class action waivers may be prevented from bringing certain employment discrimination claims. That is because some courts (federal courts in the 4th, 5th, 6th, and 11th Circuits, and some district courts in other circuits) require that a certain type of case—known as a “pattern or practice” discrimination case—be brought as a class action.

In a “pattern or practice” lawsuit, employees seek redress because discrimination is the employer’s “standard operating procedure.” If the employees win their case, the court will order the employer to change its practices to end the discrimination. For example, if the employer hires supervisors by notifying only a few selected individuals of each job opening, a court could order the employer to inform all employees of the openings to enable all employees, including members of the discriminated against group, to apply for open supervisor positions.

The Eleventh Circuit explained why pattern or practice claims should be class rather than individual actions in Davis v. Coca Cola Bottling Co. In that case, individual plaintiffs sought an injunction requiring Coca Cola to change the way it hired supervisors. The court found that the individual plaintiffs did not have standing to pursue injunctive relief because they could not prove that, in the future, they would personally be denied promotion to supervisor for discriminatory reasons. The court also expressed concern about the potential res judicata and collateral estoppel effect on other employees if the case was prosecuted as an individual rather than class case.

Whether employers will be able to avoid liability for discrimination by requiring their employees to execute class action waivers is unknown. It is certainly an outcome that should not be condoned. In a hopeful sign for employees, this summer, in Chen-Oster v. Goldman, Sachs & Co., a magistrate judge in the Southern District of New York (SDNY) denied an employer’s motion to compel arbitration. The employer argued that the case must be arbitrated because the employee had signed an employment contract that required that all claims be arbitrated. After surveying SDNY cases that required pattern or practice discrimination cases to be brought as class actions, the court determined that the plaintiffs’ right to bring a class action claim was more than just a matter of procedure, but instead went to the substance of the rights protected by Title VII. As a result, the court allowed the lawsuit to proceed in federal court.

If you believe that you have been the victim of a pattern or practice of discrimination, tell us your story.

There have been many discussions in the news and in this blog about people who were fired from their jobs based on postings on their personal Facebook pages.  In one instance, a judge held that Facebook postings can be protected in certain situations.  But what happens when employees make anti-gay comments on Facebook?  This is the question facing the school board of Union Township, NJ this week.

Viki Knox, a teacher at Union High School, was placed on administrative leave after making comments on her personal Facebook page allegedly criticizing a Lesbian, Gay, Transgender, Bisexual History Month display at her school.  As reported in the New Jersey Star-Ledger, Ms. Knox allegedly posted on Facebook that homosexuality is “a perverted spirit that has existed from the beginning of creation” and a “sin” that “breeds like cancer” and that marking was like parading “unnatural, immoral behavior before the rest of us”.

Those who seek Ms. Knox’s termination argue that teachers that hold similar views could be lax in enforcing new anti-bullying legislation passed in New Jersey last spring.  That raises the question of whether teachers are or should be held to a higher standard than those of us who do not work with children and young people.

Ms. Knox’s supporters claim that not only are her comments protected as free speech but, because they appear to be based on Knox’s religious beliefs, punishing her would amount to a violation of her right to religious freedom.  Does the fact that her comments are based on her religious beliefs immunize her comments from any official sanctions?  Were Knox’s statements even related to her employment? 

One could argue that because Ms. Knox was commenting on the display at her school, her situation is distinguishable from that of Jerry Buell, a Florida High School Teacher who was suspended and then reinstated for anti-gay Facebook postings, from his personal computer, condemning New York’s decision to allow same-sex marriage.

It’s a lot to think about.  Voltaire famously said “I may detest what you say, but I will defend to the death your right to say it.”  However, what about your right to be employed????  What do you think?  Should Viki Knox be fired?  Are her comments protected by the First Amendment?

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Have you ever ranted about your job in a public post on Facebook? Although it’s not the wisest thing to do, it happens nonetheless.  And recently, a judge from the National Labor Relations Board said that Facebook postings can be protected “concerted” activity in some situations.

In Hispanics United of Buffalo, Inc., five employees of a non-profit organization got into a public discussion on Facebook about criticism they had received from a co-worker who said they did not help their clients enough.  (The postings were heavily infused with the “F” word, but that’s beside the point.)  The employee who was the subject of the Facebook posts complained to management, and each of the five employees was fired.

The National Labor Relations Board filed a complaint against the employer, Hispanics United.  The judge’s decision addresses what is “protected activity”—in other words, what your employer cannot forbid you from doing.  Protected activity includes discussions about job performance, possible discrimination, discussions for the purpose of changing wages, hours, or working conditions, and activity that is for the purpose of mutual aid and protection.

The fact that these discussions took place on Facebook was not legally significant.  The judge looked at the activity rather than the medium.

This decision, however, does not mean that you’re free to switch out of that Powerpoint presentation you’re working on and rant about your job.  A very important aspect of the judge’s decision was that the Facebook posts were not made during working hours, and were not made on the employer’s computer.  If you use your employer’s computer, you may be in violation of internet/social media use policies and the result could be much different.

On a related note, we urge you to exercise great caution when using an employer’s computer.  Every communication you make through your work email, and every web page you visit, may be viewed by your employer and you should expect no privacy.  In fact, many courts have said that employees who used their work computer to email their attorneys have waived the attorney-client privilege, which can protect very sensitive communications between you and your lawyer.

Have you been denied overtime, proper wages, or any other right by your employer? If so, tell us your story—from your home computer!

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Some rights reserved by TheBusyBrain.

A group of Park Avenue restaurant waiters recently succeeded in persuading the Second Circuit to reject Smith & Wollensky Restaurant Group, Inc.’s appeal of a District Court ruling in the waiters’ favor, allowing them to return to the District Court to prosecute their unfair employment practices claims against the restaurant. Read the Circuit Court’s ruling here.

The waiters allege that Smith & Wollensky, which owns Park Avenue restaurant, failed to pay minimum wage and overtime and illegally deducted gratuities, among other things, which are violations of the New York Minimum Wage Act, several sections of the New York Labor Law (NYLL) and the federal Fair Labor Standards Act (FLSA). You can read more about New York State wage and hour laws here and the FLSA here.

The plaintiffs in this case hoped to represent themselves and all other similarly-situated Smith & Wollensky waiters in an “opt-out” class action alleging violations of their state law claims and also an “opt-in” collective action alleging violations of the FLSA.

A minority of federal courts have found opt-out and opt-in actions to be fundamentally incompatible with each other and have refused to permit state court opt-out class actions to proceed alongside federal FLSA opt-in collective actions in the same proceedings.

However, the District Court sided with the majority of courts in this instance finding no reason the waiters’ state and FLSA claims could not proceed side by side.

Smith & Wollensky appealed the grant of class certification arguing that Congress’s intent in requiring that employees affirmatively opt-in to FLSA collective actions is undermined when employees bring a lawsuit alleging both a FLSA collective action and an opt-out class action alleging state labor law claims. Smith & Wollensky asserted that there was an inherent conflict between the two types of actions stemming from the fact that the number of employees in the opt-out class would likely be much larger than the number in the opt-in collective action.

The Second Circuit correctly disagreed.

The District Court’s finding was supported because the waiters’ federal and state law claims derived from “a common nucleus of operative fact” and none of the factors that might have otherwise granted the District Court discretion to decline supplemental jurisdiction existed.

If you believe your employer has failed to pay you overtime or minimum wage, or has wrongfully withheld gratuities from you, please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

If your employer has classified you as an independent contractor they may be breaking the law and you should be aware that on September 19, 2011, the U.S. Labor Department entered into a cooperative alliance with the U.S. Internal Revenue Service aimed at ending “the business practice of misclassifying employees [as independent contractors]”.  The alliance allows these agencies to share information and coordinate enforcement of employers thought to be misusing the “independent contractor” status to avoid obligations to employees and the state or federal government.

Misclassifying workers as independent contractors costs the states billions in lost revenue and  allows employers to evade state laws designed to protect employees, including failing to pay overtime wages.

Last month, the California legislature passed Senate Bill 459 prohibiting the willful misclassification of individuals as independent contractors. This new legislation creates civil penalties of between $5,000 and $25,000 per violation. Although still requiring Governor Jerry Brown’s signature, it is anticipated that this legislation will become law.

In 2010 Connecticut also passed the Employee Misclassification Act (EMPA). The EMPA, which became effective on October 1, 2010, increased criminal and civil penalties on employers for misclassifying employers as independent contractors.  In Connecticut, any employer who engages in employee misclassification is liable for a civil penalty of $300 for each violation. Also, any employer who engages in employment misclassification with intent to harm, defraud or deceive the State of Connecticut, in regard to workers’ compensation insurance payments, can be guilty of a class D felony and can be subject to a stop work order issued by the Labor commissioner.  Any employer who violates a stop work order will also be liable for a civil penalty of $1,000 per day for each violation.

On October 26, 2010, the New York Construction Industry Fair Play Act became law. Under this act, employers who violate the law willfully and engage in employee misclassification are subject to up to $2,500 in civil penalties for each affected employee for the first violation, and up to $5,000 for each misclassified worker for the second violation within a five-year period of time. Employers could also be prosecuted criminally for the misdemeanor of violating the Fair Play Act.

These laws help address the loss of standard employee protections, such as minimum wage, overtime, health and vacation benefits, anti-discrimination laws, and safety regulations, which do not apply to independent contractors.  Both employers and the “independent contractor” should understand the laws of their state.  See our prior blogs for more information regarding the definition of an independent contractor.

Do you think you have been misclassified as an independent contractor?  If so, please give me a call.

Image attributed to SOCIALisBETTER.

The recent ruling in AT&T Mobility LLC v. Concepcion, et ux. was feared by many as a death-knell of class action litigation and, in particular, of consumer protectionclass actions. The ruling upheld an arbitration provision with a class action waiver that beforehand was viewed as unconscionable and unenforceable.

In the months since Concepcion, commentators’ fears have shown themselves to be well-founded as courts have interpreted the ruling broadly, sweeping many plaintiffs’ claims for fraud, unfair business practices, wage and hour violations,  discrimination, and other matters in class actions out of court. However, a ruling handed down this week by the Ninth Circuit Court of Appeals in Kolev v. Porsche Cars North America offers a ray of hope, at least for class actions involving warranty claims.

Diana Kolev sued the dealership that sold her a car with serious mechanical defects because it refused to honor her warranty claims. She alleged, among other things, that the dealership’s refusal was a violation of the Magnuson-Moss Warranty Act, which provides her the right to a refund or replacement of the defective vehicle without charge. The dealership argued, and the lower court so held, that her purchase agreement included an arbitration provision and that she should be compelled to submit her warranty claim to an arbitrator. But Ms. Kolev appealed that ruling arguing that the MMWA, an important consumer protection statute, bars provisions limiting her access to the court system.

The Ninth Circuit agreed with Ms. Kolev and reversed the lower court’s order that she submit her warranty claims to arbitration. Relying on an interpretation of the MMWA by the Federal Trade Commission, the court held that “written warranty provisions that mandate pre-dispute binding arbitration are invalid under the MMWA.”

Some people believe that the streamlined procedures that arbitration affords makes justice more accessible for many. The reality is that you get what you pay for. The rules governing litigation in the court system are there for a reason and have been refined over the generations to represent a careful balance of the interests of all involved.

More importantly, when the stakes are small, say a five or ten dollars here and there, why would anyone bother to arbitrate on his or her own? It’s hardly worth the gas money. That’s assuming you even notice you’ve been victimized by or other misdeeds. In this busy and increasingly complex world, it’s not unusual for such wrongs to go unnoticed.

Those are reasons the class action mechanism is important. It permits just one knowledgeable plaintiff to vindicate the rights of many, even where his or her own individual injury is small where companies otherwise profit due to the reality that most individuals simply don’t have the time, energy, knowledge or resources to pursue their rights, even if they are aware of the injury inflicted on them.

Big business knows that without effective regulation and the availability of the class action, profits can be increased by the systematic imposition of unjustified costs and refusal to provide contracted services, and some exploit this. Thus, the expenditure of millions of dollars on lobbying against regulation and for laws directly or indirectly limiting class actions.

Concepcion made it easier for big business to avoid class action liability and, as a result, consumers are more vulnerable to corporate wrongdoing today than they have been in a long time. But Kolev has reaffirmed our rights as a consumer, at least with respect to warranty claims arising under the MMWA, and may be a sign that damage done by Concepcion will not be long-lived.

Have you been sold a defective product only to find that your contract had a class action waiver? If so, tell us your story. Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

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Your advanced degree may exempt you from receiving overtime pay.

Under the Fair Labor Standards Act (“FLSA”), so-called “learned professionals” are included in the categories of employees who are exempt from overtime pay. To qualify as a learned professional:

  • You must receive at least $455 per week on a salary or fee basis;
  • Your primary duty must be the performance of work that requires “advanced knowledge” (work that is primarily intellectual in character) and require you to exercise discretion and judgment;
  • The advanced knowledge must be in a field of science or learning; and
  • The advanced knowledge must ordinarily be acquired by a “prolonged course of specialized intellectual instruction.”

A recent decision illustrates how employers may try to use the learned professional exemption to their advantage.

The U.S. Department of Labor sued the State of Washington’s Department of Social and Health Services (“DSHS”) and alleged that DSHS failed to pay overtime compensation to certain social workers, in violation of the Fair Labor Standards Act. The Ninth Circuit Court of Appeals concluded that, because the social worker positions at issue required only a degree in one of several diverse academic disciplines (or sufficient coursework in one of those disciplines), versus a “particular course of intellectual instruction”, DSHS had not shown that its social worker positions met the FLSA exemption for “learned professionals”.

 In its September 9, 2011 opinion in Solis v. State of Washington Dep’t of Soc. & Health Servs., the court said that, in order for the “learned professional” exemption to apply, an employer must show that the position in question requires “advanced knowledge customarily acquired by a prolonged course of specialized intellectual instruction.”  Because DSHS failed to make that showing, the social workers were entitled to overtime pay.

The opinion is a reminder that the employer has the burden to show that it is entitled to an FLSA exemption. That’s because the FLSA is aimed at employee protection.

If you believe that your employer has improperly withheld overtime pay, tell us your story.

Abbey Spanier, LLP , located in New York City, is a well-recognized national class action and complex litigation law firm.

Our ardent Facebook fans probably noticed a Time Magazine article we posted on our page last week noting that, in an employment lawsuit concerning unlawful terminations, the National Labor Relations Board recently ordered that five people that were fired for complaining about their employment on Facebook should get their jobs back, plus back pay.

The ruling is the most recent in a series of employee rights victories for employees turning to social media to discuss the conditions of their employment, a right protected by the National Labor Relations Act. We covered this topic and the NLRB’s efforts in this burgeoning area of law back in April 2011 in a blog post drafted by Jill Abrams, Esq. entitled “Do employees have the right to complaint about their jobs on Facebook and Twitter?.”

But a recent opinion issued by the American Bar Association is an important reminder that, although your right to discuss your employment on social networking websites is better protected today than it ever has been before, your employer still owns and controls any devices issued to you that you may use to access those sites.

In the context of employees communicating with their lawyers, the ABA announced last week that lawyers now have a duty to caution clients about using an employer’s devices such as a work computer or smartphone, to correspond with their lawyer. According to the ABA, clients may not have a reasonable expectation of privacy when they use an employer’s computer to send emails or to receive emails.

So, remember: your right to discuss the conditions of your workplace extend to social media sites like Facebook, but, according to the ABA, your right to privacy on devices issued to you by your employer have  not changed. Employers still often have policies reserving a right of access to your email, computer and any other devices from which you can correspond.

Do you think it’s time for us to reevaluate employees’ rights to privacy on devices issued by employers?

Abbey Spanier, LLP , located in New York City, is a well-recognized national class action and complex litigation law firm.

             Most employees are employee-at-will which means that they can be fired at any time, for any reason or no reason at all. And no advance warning is required.  The law generally presumes that you are an employee-at-will unless you can prove otherwise, usually through written documents relating to your employment.

             Anyone who gets fired has reason to be upset and even believe the reasons are unfair.  Unfortunately, not everyone who gets fired can sue their former employer.  In many instances, even though the firing may be wrong and unfair, it may all be perfectly legal so there is nothing you can do about it. 

             But just because you are employee-at-will does not mean that you are a slave.  Employees do have some rights.  You have the right to get paid for the all the hours you work and you have the right to work in an environment free of sexual or racial harassment. Employment discrimination based on race, sex, age, religion, disability is prohibited.

             If your employer is subject to federal and state laws prohibiting job discrimination, you cannot be fired because of certain characteristics, such as your race, religion, or gender. Similarly, you cannot be fired because you have complained about illegal activity, about discrimination or harassment, or about health and safety violations in the workplace And you cannot be fired for exercising a variety of legal rights, including the right to take family and medical leave, to take leave to serve in the military, or to take time off work to vote or serve on a jury.

If you have a question about your rights, please contact me.

Image used with permission from Microsoft

For many, Labor Day represents the beginning of football season or the last long weekend of the summer.  However, there’s more to Labor Day. It’s a celebration of American workers and their contribution to our success as a nation.

The first Labor Day was by some credible accounts celebrated in New York on September 5, 1882,  organized by the Central Labor Union of New York.  The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883.  In 1884, the Central Labor Union urged similar organizations in other cities to follow the example of New York and celebrate a “workingmen’s holiday” on that date.

The idea spread and in 1885 Labor Day was celebrated in many industrial centers of the country. It became a United States federal holiday only in 1894 (see the story behind that, below) and is observed on the first Monday in September.  According to the Department of Labor, Labor Day “is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.”

Labor Day was not legislated a federal holiday until 1894, in the days following a strike that began in Pullman, Illinois, a factory town established by George Pullman for workers who built the passenger rail cars that became ubiquitous on America’s burgeoning rail system. Pullman workers suffered decreased wages during the economic depression following the Panic of 1883, while working 16 hour days and paying undiminished rent for the Pullman owned housing they were required to inhabit and higher than market prices for the goods they purchased in Pullman factory stores. These conditions led to a wildcat strike of Pullman workers, soon joined by members of the national American Railway Union.

The Pullman Strike, involved some 250,000 workers across the country at its peak and was eventually broken by the U.S. military and U.S. Marshals. More than a dozen strikers were killed and dozens more wounded. But the American Railway Union succeeded in bringing national attention to the strength of the burgeoning labor movement and inspired improvements in laborers’ working conditions. President Grover Cleveland, aware of the growing power of the workers’ movement, immediately took a small step toward conciliation by asking Congress to establish the Labor Day holiday, and that was done only several days after the Pullman Strike ended.

Conditions did eventually improve, largely as a result of the labor movement.  According to the U.S. Department of Labor, the force of American labor has added materially to the highest standard of living and the greatest production the world has ever known. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation’s strength, freedom, and leadership — the American worker. More important, we should also hope that the present threat to that high standard of living can be reversed and use our best efforts to achieve that reversal.

From Life Magazine, In Praise of the American Worker: american-worker

Link to the Life Magazine gallery:

             We have written several posting about age discrimination  and pregnancy discrimination.  But Federal and many state laws also prohibit employers from discriminating against employees because of their religion.

             This means that an employer cannot make any decisions based on an employee’s religious beliefs or practices, nor can an employer treat an employee differently because of their religious beliefs. For example, an employer may not refuse to hire individuals of a certain religion, may not impose stricter promotion requirements for persons of a certain religion and may not impose more or different work requirements on an employee because of their religious beliefs or practices.

             Recently, a religious discrimination lawsuit was filed against the McKinsey & Co. by a former employee who says he was fired after going to the police to complain about threats he received for going to the company’s Human Resources department.  In the lawsuit, the plaintiff alleged that problems began when he wore a yarmulke to work as an expression of his practice of “theosophy”, a movement that finds truth in all religions.  The plaintiff says he was subjected to derogatory and humiliating comments from his co-workers and supervisors including accusations he wasn’t “a real Jew,” being told to “Take that yarmulke off! You’re creeping me out,” and “you can’t be Jewish if you’re Italian.”

            In another case, Taco Bell was sued by the EEOC for terminating an employee who refused to cut his hair because of his Nazirite religious beliefs.  According to the complaint, the employee is a practicing Nazirite who, in keeping with his religious beliefs, has not cut his hair since he was 15 years old.  The plaintiff was informed, that he unless he cuts his hair, he could not longer work at the restaurant.

            Federal and state laws seek to prevent discrimination based on race, sex, religion, national origin, physical disability and age.  There is also a growing body of law that seeks to prevent employment discrimination based on sexual orientation. 

            Discrimination can come in many ways and some acts that have been found to be discriminatory and which are legally prohibited include discriminatory bias in: promoting, transferring, recalling and laying off workers; compensating, assigning and classifying employees; dispensing fringe benefits; hiring and/or firing employees; recruiting workers and posting job openings; testing; training and apprenticeship programs; retaliation; pay, retirement and disability leave; and various types of harassment.

Do you think you have been discriminated against?  Please tell me your story. 

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.

Abbey Spanier is delighted to include the following post by guest blogger David Yamada, a professor of law and director of the New Workplace Institute at Suffolk University Law School in Boston. This post is drawn from commentary on his blog, Minding the Workplace.  
Enabling and Protecting the Freelance Workforce 
By David Yamada 

If we’re going to create new jobs amidst the Wall Street casino economy and political gridlock in Washington, a big dose of entrepreneurship and self-help is likely to be part of the answer. From a legal standpoint, however, there’s at least one big catch: Many innovative approaches to job creation are hindered by laws that do not cover independent workers. You see, many of our worker protections, employee benefit laws, and tax provisions were adopted with traditional employment relationships in mind. Independent workers often fall between the cracks of these laws. 

Law reform for 42 million workers 

That’s a pretty big group: According to the Freelancers Union, a support and policy advocacy organization, some 42 million people may be classified as freelance or independent workers, representing roughly 30 percent of the American workforce.In a blog post last year, Sara Horowitz, the group’s founder, summarized the legal challenges that confront freelancers and proposed a three-point policy agenda to help them:Independent workers need (1) unemployment insurance to stabilize their income – and the U.S. economy – when they are involuntarily unemployed; (2) protection from late or denied payments, which 77% of freelancers have faced; and (3) access to affordable health insurance, which is prohibitively expensive to an individual on the open market.Freelancers Union advocates in New York have been lobbying for the Freelancer Payment Protection Act, which would allow freelance workers to file claims with the state labor department for unpaid wages from deadbeat clients. 

From the business sector, too 

Perhaps folks from the business sector are grasping the problem as well. Richard Greenwald of St. Joseph’s College in Brooklyn, in a recent column for Business Week, examined some of the legal hurdles facing workers in America’s freelance sector, including unemployment insurance, workers’ compensation, legal recourse for unpaid client bills, and health care coverage. In terms of legislative action, Greenwald suggested:    Congress should reenact the Small Business Jobs Act of 2010. This piece of the stimulus, which expired at the end of last year, allowed  freelancers to fully deduct their health premiums before assessing Social Security and Medicare tax. Then let’s amend federal labor law to cover the nonpayment of consultants so they have recourse through the Labor Dept. rather than suing in small claims court.  

Promoting enterprise and job growth 

At a time when we sorely need to jumpstart this economy, the independent, freelance sector offers opportunities for innovation, small business generation, and job creation. Our laws should facilitate, not hinder, the tapping of these underutilized energies and skills.    


Yesterday, in a decision that has made the headlines, federal judge Loretta Preska dismissed a lawdsuit brought against Mayor Bloomberg’s company, Bloomberg LP. The Equal Employment Opportunity Commission (the “EEOC”) brought an employment discrimination class action on behalf of Bloomberg employees who were pregnant or had recently returned from maternity leave. The EEOC alleged that Bloomberg engaged in a systemized practice of decreasing the pay, responsibility, or other terms and conditions of the employment of pregnant employees and mothers when they became pregnant or took maternity leave. Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978 (“PDA”), prohibits pregnancy-based discrimination  because it constitutes sex dsicrimination.

Acknowledging that some “isolated” instances of discrimination may have occurred at Bloomberg, Judge Preska found that the EEOC did not present sufficient evidence to demonstrate that discrimination was Bloomberg’s standard operating procedure, or that there was a pattern or practice of discrimination at Bloomberg. The court took issue with the fact that the EEOC presented only anecdotal or testimonial evidence in support of its claims that a pattern or practice of discrimination existed at Bloomberg. To succeed on a pattern-or-practice claim, plaintiffs must prove more than sporadic acts of discrimination; rather, they must establish that intentional discrimination was the employer’s standard operating procedure. Although the class action claims were dismissed, the option exists for at least some of the plaintiffs to proceed on an individual basis.

Particularly interesting were the Judge’s comments about the EEOC’s theory that the case was about the “so-called work life balance.” Judge Preska quoted several CEOs of successful American corporations, both male and female, including General Electric CEO, Jack Welch, who said that “There’s no such thing as work-life balance.” The court said that “the law does not mandate “work-life balance” and that companies are not required to ignore employees’ work-family trade-offs when deciding about employee pay and promotions.

So, if a woman  devotes 75% of her time to her job because she spends the remaining 25% with her family, can her employer consider that in determining her compensation and promotion, without fear of being held liable for discrimination? What do you think? Is that discrimination?

Have you been the subject of discrimination for being pregnant, taking maternity leave or trying to maintain a work-life balance? If so, please tell us your story.

Abbey Spanier, LLP,  located in New York City, is a well-recognized national class action and complex litigation law firm.


Canberra_firefighters_e1.jpg, Peter VDW (2008)

You may remember the case about the firefighter promotion exams in New Haven, Conn. that went to the U.S. Supreme Court. In that case, Ricci v. Stefano, the City of New Haven and its Civil Service Board (“CSB”) were concerned that white firefighter candidates outperformed minority candidates on the exams, and that the test results would cause New Haven to be held liable for “disparate impact liability” under Title VII of the Civil Rights Law. Employers can be subject to disparate impact liability when they use employment practices that appear to be neutral and non-discriminatory (commonly referred to as “facially neutral”), but whose effect or application is actually discriminatory. Title VII of the Civil Rights Law prohibits employment discrimination based on race, color, religion, sex or national origin.

 Ultimately, the CSB discarded the test results due to its concern that the test would be deemed discriminatory. 18 firefighters (17 white and 1 Hispanic) challenged that action, arguing that the CSB’s refusal to certify the test results resulted in disparate treatment against the 18 firefighters under Title VII. Ultimately, the U.S. Supreme Court agreed with the firefighters and ordered the City of New Haven to certify the results.

 Enter Michael Briscoe, an African-American New Haven firefighter, who said that because the New Haven exams were arbitrarily weighted, they resulted in an unlawful disparate impact on him. According to Mr. Briscoe, the test was designed so that 60% was written and 40% was oral, when the industry norm was 30%/70%. He asked the court to stop the city from using the 60/40 weighting and to be eligible for a promotion (to which he would be entitled if the 30/70 approach was used) with retroactive pay and seniority, but without displacing any of the firefighters who were already promoted. The federal judge in Connecticut ruled that Briscoe’s lawsuit couldn’t go forward because the Supreme Court said the test results should be used. Mr. Briscoe appealed that decision to the Second Circuit Court of Appeals.

 The Second Circuit said that Mr. Briscoe could proceed with his lawsuit and that the other firefighters would keep their promotions.  Unless Mr. Briscoe can show that New Haven refused to use an alternative employment practice that would reduce the disparate impact of the test on him, New Haven only needs to demonstrate that the test is “job related” and “consistent with business necessity”. It’s important to keep these principles in mind if you think you have an employment discrimination claim.

 We’ll watch this case and report on the outcome.

Have you been the subject of employment discrimination? If so, please tell us your story

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

Will we ever win the war on pay discrimination?

Even though the Equal Pay Act was enacted nearly 50 years ago, U.S. workers still have to fight to get what that law supposedly guarantees. According to the U.S. Labor Department’s Bureau of Labor Statistics, American women still face a gender-based pay gap (women earned 77 cents for ever dollar earned by men in 2010), and race and ethnicity-based pay gaps put male and female workers of color at a disadvantage.

Workers find it even harder to fight pay discrimination in our down economy. An employee is less likely to stand up for his/her rights to equal pay, or to speak out against unfair employment practices, when job alternatives are scarce.

On August 10, 2011, the Department of Labor announced that it is considering the development of a data tool to help it address potential cases of pay discrimination-an unfair and illegal labor practice. That tool would assist in the collection of  information on salaries, wages and other benefits paid to employees of federal contractors and subcontractors. Under Executive Order 11246, companies that do business with the federal government are prohibited from engaging in discriminatoty employment practices on the basis of race, color, national origin, religion or sex. The Department of Labor’s Office of Federal Contract Compliance Programs uses investigators to look into potential cases of employment discrimination and would use the data tool to provide its investigators with insight into potential pay discrimination that warrants further review. The Labor Department has invited comment on the development of its pay discrimination data tool. While the tool will only serve to help root out pay discrimination in companies that do business with the federal government, it could be a positive step toward helping to expose the problem.

Have you been the subject of pay discrimination? If so, please tell us your story.

You can read our earlier post about the Equal Pay Act here.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.

A Connecticut Court ruled that Schering Corp. violated the Fair Labor Standards Act (“FLSA”) by treating its sales representatives as exempt employees to deny them overtime pay.

This blog previously discussed cases where other pharmaceutical companies improperly treat their sales representatives as outside sales representatives in order to deny them overtime pay.  Schering also made this agrument but when that failed  it argued that its sales representatives were not entitled to overtime pay because they qualified under the “administrative employee” exception of the FLSA.

To qualify as an administrative employee the employee must three tests must be met:

  • The employee must earn a minimum amount of at least $455 a week,
  • The minimum amount must be paid on a salary or fee basis and
  • The employee must perform specific job duties.

The focus of the duties tests for exemption is the employee’s primary duty.  Primary duty means the principal, main, major or most important duty that the employee performs.

The Court said that “[w]ith respect to employees involved in sales, the distinction between whether or not their work directly relates to management of general business operations turns on whether that employee makes specific sales or promotes sales generally.”

The Court noted that the sales representatives really only promoted the company’s product.  The company provided the sales representatives with scripted dialogue that included:  sample openings; a menu of questions; responses to questions and sample closings.  As a result, the court found that the sales representatives were not directly related to Schering’s management or general business operations so as to qualify under the “administrative employee” exception.

The court said that the sales representative were similiar to the employee in a clothing store “who assists customers in finding their size of clothing.”

Are you a sales representative in a company which provides you with a script to promote its product and not receiving overtime pay?    Please tell me your story.

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.

You might want to wait before signing that mandatory employment agreement.

You may remember that in April 2011, the U.S. Supreme Court decided the Concepcion case which received a huge amount of press coverage. As a result of that decision, companies are using arbitration clauses in consumer agreements to block consumers from bringing class action arbitrations. Many people have feared attempts to apply the Concepcion decision to other areas of the law, particularly employment law.  

In January 2011, an administrative law judge (“ALJ”) decided that it was not unlawful for a company named D.R. Horton, Inc. to require its employees, as a condition of employment, to sign an arbitration agreement in which they agreed to submit their employment disputes to individual arbitration. The agreement also provides that the arbitrator will not have any authority to consolidate the claims or treat them as class or collective actions.  In other words, in the event of a dispute with their employer, those employees cannot bring an employment  collective or class action in a court or in an arbitration. So much for the rights of the little guy.

Fortunately, that isn’t the end of the story. In June 2011, the National Labor Relations Board (“NLRB”) (an independent federal agency) who will review the ALJ’s decision, invited those interested to file amicus (“friend of the court”) briefs to address the question whether D.R. Horton, Inc.’s arbitration agreement violated the National Labor Relations Act (NLRA). That’s very important because, under the NLRA, workers have the right to bring joint, collective and class actions. Even though the NLRB didn’t say so in its invitation for briefs, it is believed that the NLRB is interested in how the Concepcion decision will impact the D.H. Horton, Inc. decision.

An amicus brief filed by 27 organizations that represent the interests of workers across the country argued, very convincingly, that Concepcion does not affect employees’ rights under the NLRA because the NLRA gives employees the statutory right to engage in concerted legal activity(meaning they can join together) for their mutual aid and protection-rights that the Concepcion consumers did not have.  Agreeing with the ALJ could mean the NLRB would be changing many years of law aimed at ensuring the rights of employees to act as a group.

We will be watching out for the NLRB’s decision and report on the outcome. You can read what we had to say about legislation that will prevent mandatory arbitration in employment, consumer and civil rights cases here.

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.

That is, of course, depending upon where you live.

If you live in Connecticut, New York or Vermont you are entitled to overtime.  But if you live in Arizona, California, Idaho, Montana, Nevada, Oregon and Washington you are not.

In two separate class actions two different interpretations were given to the definition of an outside sales employee in the pharamaceutical industry.  The Second Circuit (Connecticut, New York and Vermont) held that pharmaceutical sales representatives are not outside sales employees and therefore are not exempt employees and should be paid overtime for working more than 40 hours per week.  The Ninth Circuit (Arizona, California, Idaho, Montana, Nevada, Oregon and Washington) held just the opposite, deciding that pharmaceutical sales representatives are outside sales employees and therefore are not entitled to overtime.

The courts differed on the interpretation of an outside sales representative in the pharmaceutical industry. Both courts agreed that the pharmaceutical reps cannot sell medications to patients.  But the Second Circuit considered the fact that the sales reps do not actually make the sale and considered these individuals to be engaged in marketing or promotion of the product to doctors and others.  The Ninth Circuit, on the other hand, held that the sales reps were selling the product in the only way the law allows to doctors and others who influence a sale.

Most jobs are governed by the Fair Labor Standards Act (“FLSA”). Some are not. Other jobs, while governed by the FLSA, are considered “exempt” from the FLSA overtime rules.  Please see our prior post.  The FLSA contains an exemption from the payment of both minimum wage and overtime pay to any employee employed as an “outside sales employee”.  But the interpretation of “outside sales employee” can vary and whether a job falls within this particular exemption of the FLSA is not always so clear cut.

Are you a sales representative for a pharmaceutical company in Connecticut, New York and Vermont and denied overtime?  Please tell me your story.

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.

This takes the “rich get richer, the poor get poorer” to a new level.  The New York Times reports that its review of job vacancy postings on popular sites such as, CareerBuilder and Craigslist uncovered that employers are now posting ads saying they will consider, or “strongly prefer,” applicants who are currently employed or recently laid off.

Is it legal to discriminate against the unemployed in New York? For now, yes: the unemployed are not a protected class (generally, race, age, religion, national origin, sex, and color are protected classes).  However, discrimination against the unemployed is unfair: it creates a vicious cycle where one needs a job to get a job.

The unemployed may soon receive some help.  The New York legislature is considering a bill that would make it illegal for employers to discriminate against the unemployed in advertising, hiring, and setting the terms of employment.  The bill defines “unemployment status” as being unemployed, having actively looked for employment during the most recent four week period, and currently being available for employment.

New York is not alone in its quest to ban discrimination against the unemployed.  Michigan is considering a similar law, and even Congress is looking into the matter.  In March, 2011, New Jersey actually passed a law that prohibits employers from publishing job advertisements which state that unemployed individuals cannot apply for the position.  Violations are punishable by a $1,000 fine for the first offense, and $5,000 for subsequent offenses.  Notably, the prohibition extends only to wording in advertisements, and does not ban actual discrimination against the unemployed.

Should New York ban discrimination against the unemployed? For a great debate on the subject, click here.

While Congress is busy disagreeing over the national budget, two House members, Rosa DeLauro (D-Conn.) and Hank Johnson (D-Ga.), are trying to help unemployed Americans by sponsoring the Fair Employment Opportunity Act of 2011. If passed, this law will prohibit employers (with over 15 employees) and employment agencies from screening out or excluding job applicants based on the fact that they are unemployed.

Under the proposed legislation, it will be illegal to refuse to consider hiring someone because that person is unemployed. It would also be unlawful to indicate, in a job ad, that a person would be disqualified or not considered based on the fact that he or she is unemployed. The only exception is when a person’s employment in a similar or related job for a period of time reasonably close to hiring is truly a requirement that is necessary to successful job performance.

An employment agency would be precluded from taking an individual’s unemployed status into account in screening or referring applicants for unemployment or to limit access to information about jobs.

This law has teeth because it provides that damages will be paid to the unemployed person by an employer or employment agency who breaks the law. It also allows an affected employee to sue in state or federal court on behalf of himself or other people harmed in the same way he has been harmed (indicating that a class action or collective action can be brought), unless the Secretary of Labor decides to bring legal action.

If you want to see this law pass, you can contact your Congressional representative or senator and encourage support for the bill.

Abbey Spanier, LLP, located in New York City, is a well recognized national class action and complex litigation law firm.

Employers sometimes classify their workers as “exempt” employees to avoid paying them overtime.

An example of a situation where it has been alleged that the employer engaged in unfair employment practices and misclassified employees in order to avoid paying overtime involves employer Real Estate Mortgage Network.

Real Estate Mortgage Nertwork, which is in the business of selling mortgages, is alleged to have improperly misclassified underwriters and closers as administrative employees who are “exempt” salaried employees, and thus not eligible to receive overtime pay.

Federal regulations specify that a worker is employed in an administrative capacity if he or she performs work “directly related to management policies or general business operations” and customarily and regularly exercises discretion and independent judgment.”

Underwriters and closers of Real Estate Mortgage Network did not have any ability to “exercise discretion and independent judgment”.  Underwriters were given a loan application and were required to follow a detailed list of criteria. If the loan application conformed to the criteria, the loan was approved. Closers were then given the file to handle the standard closing procedures set by the employer, including preparing the paperwork and arranging for the disbursement of funds.

Underwriters and closers of Real Estate Mortgage Network did not exercise any independent judgment regarding the approval or disapproval of the loan and therefore should have been paid overtime.

Abbey Spanier, LLP , located in New York City, is a well recognized national class action and complex litigation law firm has filed a class and collective action on behalf of persons who worked as underwriters and/or closers entitled: Thomson v. Real Estate Mortgage Network, Inc., Real Estate Mortgage Network Holding, LLC, Security Atlantic Mortgage Company, Case No. 2:11-cv-01494, DNJ

Are you an underwriter or a closer who has been classified as exempt and denied overtime? Please tell me your story.

In our post yesterday, we discussed the fact that employers are attempting to use the U.S. Supreme Court’s Dukes decision to persuade courts to de-certify employment class and collective actions. There seems to be a trend in the employees’ favor in employment collective actions.

On July 21, 2011, a judge in the Eastern District of Pennsylvania denied the defendant’s attempt to decertify an employment collective action. In that case, current and former American Eagle Express Inc. delivery drivers sued the company under the Fair Labor Standards Act for unpaid overtime wages. The court conditionally certified the case as a collective action in May 2011.

AEX’s attempt to have the action de-certified was denied. The court explained that, in order to determine whether a group of plaintiffs is “similarly situated” and therefore able to obtain condition certification as a collective action, they need to do two things. The first is to make a “modest factual showing” that they have satisfied the similarly situated requirement. The judge said that his previous determination that the employees met the requirement was unaffected by Wal-Mart Stores, Inc. v. Dukes. During the second step of the collective action certification process, the court will conduct a specific factual analysis to make sure that each proposed employee member of the group is an appropriate plaintiff. But that does not happen until the close of class discovery. At that time, AEX can raise the question that was the subject of Dukes; whether AEX acted in a way that was common to all the employee members of the plaintiff group. If the answer is yes, the case will proceed as a collective action and if the answer is no, it will be de-certified. But until then, the case will proceed as a collective action.

If you think you have been treated unfairly by your employer,  please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well recognized national class action and complex litigation law firm.

There has been much discussion in the legal world about the impact of the Supreme Court’s June 20, 2011 decision in Wal-Mart Stores, Inc. v. Dukes, including on this blog. Not surprisingly, following Dukes,  employers have attempted to de-certify employment collective actions, as well as  employment class actions. Recently, at least two federal judges have declined to de-certify employment collective actions.

In Hernandez v. Starbucks Coffee Co., Starbucks assistant managers asserted that the coffee company violated the FLSA when it misclassified them as managers who were not entitled to overtime. The employees said that their primary responsiblities were not managerial and, as a result, they were entitled to receive overtime pay. On June 29, 2011, Magistrate Judge Snow of the Southern District of Florida rejected Starbucks’ argument that the plaintiffs had to rely on highly individualized inquiries into their day-to-day actions to determine whether plaintiffs performed management duties and were therefore  exempt from the overtime requirements.  He said that the employees must present  similar claims, but they need not be identical.

A few days later, on July 1, 2011, Judge Zouhary of the Northern District of Ohio concluded that the “concerns expressed in Dukes did not exist” in Creely v. HCR ManorCare, Inc. because Dukes involved millions of individual employment decisions concering hiring and promotions.The issue in HCRManorCare, on the other hand,  was whether company-wide policies, as implemented, resulted in the failure to pay plaintiffs for all the time they worked. HCR Manor Care was brought under the FLSA on behalf of employees whose pay was subject to an automatic meal break deduction, even when they performed compensable work during their meal breaks.

So far, so good. It seems that collective actions are safe from Dukes. Let’s hope it stays that way.

If you think you have been treated unfairly by your employer,  please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well recognized national class action and complex litigation law firm.

Have you applied for a job only to be told that the company is looking for a “recent college grad” or an “energetic person”?

These phrases can imply age-based hiring discrimination.

The federal Age Discrimination in Employment Act (ADEA) protects people age 40 and older from employment discrimination based on their age. The law applies to employers with 20 or more employees, plus federal, state and local governments.  Please see our prior posts.

The laws against discrimination make it illegal to discriminate against people age 40 and older whether they are already an employee or applying for the job.  The ADEA applies to all employment practices, including hiring, terminations, pay, promotions, benefits and any other terms of employment.

For example, an interviewer can ask about your age but they shouldn’t because if you are not hired it will be difficult for that employer to prove that age wasn’t a hiring factor in not hiring you.

Also, courts have frowned on employers who take the view that certain types of jobs should go only to younger people because older ones don’t have the energy or “image” for a specific job.

Recently Cavalier Telephone  Company paid $1 million to settle an age discrimination lawsuit.  It was found that the company made it a practice of not to hire applicants over 40 years old by saying “both verbally and in writing that the company was looking for candidates for its sales positions who were ‘recent college graduates,’ and in their ‘early 20s or 30s.’”

So when you are looking for a job be aware of the phrases used by the interviewer.  If you think you have been discriminated against because of you age, please tell me your story.

Abbey Spanier, LLP, located in New York City, is a well recognized national class action and complex litigation law firm.  The Firm is presently litigating an age discrimination case against Quest Diagnostics.


Since the Supreme Court’s decision in Wal-Mart, Inc. v. Dukes captured the nation’s attention, many friends and colleagues have asked me if Dukes is the death knell for class actions or class action discrimination cases. The questions I was asked reminded me of how difficult it is for non-lawyers – and even lawyers who practice outside the class action field-to understand the effect of the Dukes decision. These inquiries also demonstrated, once again, the influence of the media on how we think about, and react to, the news.

Those of us who practice in the class action field know that Dukes speaks to a fairly narrow set of facts and issues. But that point seems to have been lost in the deluge of news reports and opinion pieces that followed the decision.

recent federal court decision involving alleged racially discriminatory treatment by the City of New York with respect to firefighter applications shows that Dukes did not leave people seeking to bring discrimination class actions without a remedy. In that case, the plaintiffs alleged that black and Hispanic firefighter applicants were not hired because  of discriminatory entrance exams. The judge rejected New York City’s attempt to use the Dukes decision to decertify the case.

Litigants will always try to use prior cases to argue their own positions. That is how our legal system works. But it is important to note that when high profile Supreme Court cases like Dukes come along, there is a tendency for people to overplay their hand. The New York City firefighters case is just one illustration that Dukes does not have a choke hold on discrimination class actions and that they can succeed after Dukes.

Abbey Spanier, LLP, located in New York City,  is a well-recognized national class action firm that focuses on employment law, securities law, consumer rights and antritrust cases.

How are You Being Treated by Sodexo?

All over the U.S. and around the world, current and former employees of Sodexo are coming forward and fighting against low wages, poor working conditions and discriminatory treatment by the company.

The Service Employees International Union (“SEIU”) has reported that seven states have filed unfair labor practice charges against Sodexo.  The SEIU is activity trying to educate the public about the working conditions at Sodexo.  The SEIU has requested that the New Jersey Department of Labor investigate allegations of wage theft on behalf of employees at Highland Park schools.

Several class actions have been filed on behalf of particular current and former Sodexo workers in California and at two hospitals in Pennsylvania.  According to the complaint filed on behalf of workers at these hospitals, Sodexo workers to work 15 to 45 minutes off the clock and work through breaks without getting paid for this time.

On April 12, 2011, an individual employed as a chef filed a lawsuit (not a class action) allegeing that he regularly worked approximately 60 to 70 hours per week but was paid the same amount regardless of the number of hours he worked.  The chef alleged that Sodexo misclassified him as an exempt employee and failed to pay him overtime in violation of the FSLA.

If you work or worked for Sodexo and feel that you and others like you were not paid for all the hours you worked or were made to work through your meal and rest breaks, please tell me your story.

During a time teeming with animosity for class actions, reports of the Supreme Court’s rejection of a challenge to a $270 million verdict on behalf of a class of smokers in Louisiana against several big tobacco companies comes as welcome news.

Not only does the Court’s refusal to hear the appeal represent a big win for plaintiffs in that case, but it should also give plaintiffs in all consumer class actions, securities class actions and employment class actions something to smile about.

As I wrote in December, through a rarely-used procedure, Justice Scalia unilaterally entered an order permitting Philip Morris and other cigarette companies liable for the multi-million dollar verdict in a state court action, Scott v. American Tobacco Co., 2004-2095 (La.App. 4 Cir. 02/07/2007); 949 So. 2D 1266, to put off paying plaintiffs until the Supreme Court had decided whether it would hear an appeal of the ruling.

In entering his order, Justice Scalia went out on a limb with the following prediction: “I think it reasonably probable that four Justices will vote to grant certiorari, and significantly possible that the judgment below will be reversed.”

As it turned out, Justice Scalia was wrong about that. Without explanation, six or more of the justices voted against granting the petition and the Supreme Court refused to grant certiorari.

In a term that brought us the AT&T Mobility LLC, v. Concepcion, 563 U.S. __ (2011), and Wal-Mart Stores, Inc. v. Dukes, 564 U.S. __ (2011) rulings, that’s great news.

Those rulings are part of a trend limiting individuals’ access to the courts through procedural rulings. The Scott case presented similar procedural questions with potentially far-reaching effects. And, had the Supreme Court granted certiorari, it would have had yet another opportunity to make life tough for class action plaintiffs.

Sprint Nextel Corp settled a class action related to unpaid overtime involving 13,000 cellphone store employees who claimed the company violated labor laws because they were not paid for all hours worked.  The case alleged that Sprint store employees were not paid for their daily store opening or closing duties, pre- or post-shift work activities, attendance at mandatory meetings or for the time it took to log into their computers.

The suit alleged Sprint required workers to record work time of 40 hours or less per week even when they worked more than 40 hours a week, and to record work of more than 40 hours per week without receiving commensurate overtime compensation.

Sprint was also accused of failing to properly or timely include commissions earned when computing overtime adjustments that were due to employees.

Through mediation, the parties reached a deal to settle the dispute for $2.7 million.  The class consists of all employees who worked in a Sprint retail sales location in the U.S. at any time from June 2005 to April 2010 and who held positions such as account services representatives, assistant store managers and retail consultants.

Are you a retail employee who has not been receiving your overtime pay?  Do you work more than 40 hours per week and are not getting compensated for all your hours. Please tell me your story.

“Workplace violations are severe and widespread in low wage labor markets.”  That’s one conclusion in a report entitled “Broken Laws, Unprotected Workers – Violations of Employment and Labor Laws in America’s Cities”.  The study which was conducted in 2008 in Chicago, Los Angeles and New York City found, among other things, that the “framework of worker protections” established over the last 75 years is not working and that many employment and labor laws are “regularly and systematically violated”.  The study found that low wage workers in the largest cities are the ones most adversely impacted by these systematically violations of the labor laws.  One very prevalent violation of the labor laws is the failure to pay minimum wage.  Minimum wage laws apply to workers regardless of whether they are full time or part time employees.  The study found that women are more likely than men to experience minimum wage violations and foreign born were nearly twice as likely as U.S. born workers to experience minimum wage violations.

The failure to pay minimum wage not only hurts the employee who is directly impacted by the loss of wages but society as a whole.  The study notes that when “some employers violate the law responsible employers are forced into unfair competition, setting off a race to the bottom that threatens to bring down standards throughout the labor market.”

Paying minimum wage is not a cure-all for poverty, and workers should not be content to settle for minimum wage work, but it does create a baseline income and promotes a more fair and equitable society.

If you are not getting paid minimum wage, please tell me you story.

The Supreme Court’s opinion this week in Wal-Mart v. Dukes embraced the premise that a written policy forbidding sex discrimination may be enough to immunize employers from accountability for discrimination that can affect personnel decisions.    Now, with the blessing of the Supreme Court, any company that adopts a corporate anti-discrimination policy may have a strong defense against a case brought as a class action, regardless of what its management is really doing. The decision was not on the merits of the plaintiffs’ discrimination claims, meaning that the Court did not decide whether Wal-Mart discriminated against plaintiffs; only that the claim cannot be pursued pursuant to a certain section of the federal rule regarding class actions. 

The justices split along ideological lines on the issue of whether the plaintiffs had satisfied the commonality requirement of Federal Rule 23(a). While the dissenting Justices agreed with the majority that the case should not be certified under Rule 23(b)(2), they would have remanded the matter to the District Court for further review.

The four dissenting justices, led by Justice Ruth Bader Ginsburg, wrote “[t]he practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been know to have the potential to produce disparate effects” and was enough to present a common question under Rule 23(a). The dissenting Justices point out that women make up 70% of Wal-Mart’s hourly workers but only 33% of management employees.  They also note that the higher up you look in Wal-Mart’s corporate structure, the lower the percentage of women.  In addition, these Justices note that plaintiffs’ “‘largely uncontested descriptive statistics also showed that women working in the company’s stores ‘are paid less than men in every region’”.

Sex or race or age discrimination is harmful to society and, in fact, negatively affects everyone (within the same company or not) in many of the same ways.  While the individual results may be different – hired or not, promoted or not, trained or not – the act of discrimination is to maintain a hierarchy and enforce control of the subordinate.  As the dissenting Justices noted, “[t]he risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.”  Please see our prior post on discrimination.

According to the EEOC there has been a substantial increase in the number of age discrimination complaints filed since the recession began in 2007.

While Federal law is supposed to protect workers 40 and older, proving that you have been denied a job or laid off to make way for younger and/or cheaper workers is not easy.  See our prior post.

And the Supreme Court has made it even harder.  The Court increased the burden of proof the employee must show to win an age-discrimination case.  According to the Court an employee must show that age was a “but-for” cause of his or her employer’s actions, and the employer need never show that it would have made the same decision regardless of age.

The Court’s ruling is fundamentally unfair because it makes it very hard for older workers to prove they have been the victim of age discrimination even though EEOC has seen a substantial increase in such activity.  Have you been discriminated against because of your age?

New York’s Restaurant Tip Credit Law

Many states have minimum wage laws which  differ from the FLSA. The minimum wage in New York is $7.25 per hour.  Effective January 1, 2011, restaurants in New York are allowed to use a “tip credit” of $2.25 per hour to count towards the minimum wage that they must pay their tipped employees.

What this means is that restaurants in New York can pay their waiters and waitresses $5.00 per hour providing that they make at least $7.25 per hour after keeping their tips.

The tip credit allows employers to pay less than minimum wage on the assumption that tips will push the employee back over the minimum wage.   If employees don’t actually make enough in tips to bring them up to minimum wage, the employer must make up the shortfall.

If a restaurant chooses to use the “tip” credit it must:

  1. inform employees of the tip credit law; and
  2. all tips received by such employees must be retained by the employees (unless there is a valid tip pooling arrangement).

Are you a tipped employee (see our previous post for more information)?  Are you making minimum wage?  If you are considered a tipped employee you need to know your rights to make sure that your employer is paying you correctly.  If you think you are not getting what you deserve, please tell me your story.

Employees often rely on their employers to keep accurate records of the hours the employees work. But employers’ records may not be as reliable as you think. If you want to be sure that you are paid for all of the hours you work, it is best to keep track of those hours yourself.

Recently, the New York Department of Labor announced that it had reached a $5.1 million settlement with Lenny’s: The Ultimate Sandwich for violations of New York’s minimum wage and overtime laws.  From 2002 to 2008, Lenny’s cheated 800 employees by paying them less than the minimum wage and not paying them the overtime they were owed. The employees worked 10 to 12 hours a day, six to seven days a week, at an average weekly salary of $275. Under New York state law, the workers should have been paid at least $500 a week for the same number of hours.

Lenny’s failed to provide wage statements to its workers, as required by law(see our previous post), and its time records were inaccurate.   The accuracy of an employer’s time records can become a major issue when employees are trying to recoup money owed to them. The reliability Wal-Mart’s records was a main focus when it was sued by its employees, as we reported in an earlier blog post.

Do you receive wage statements from your employer? Do you check those wage statements to be sure they are correct? If you keep a daily log of the hours you work, it is easy to do.

Under federal law, employers of nonexempt workers (including hourly workers) must keep records of certain information, including the number of hours worked by their employees. There is no specific requirement for the form in which the records should be kept, but there are clear requirements about the kind of information employers must keep. Those requirements are:

  • the employee’s full name, social security number, sex and occupation
  • the employee’s birth date if the employee is under 19
  • the time and day of the week when the employee’s work week begins
  • the total number of hours worked during each work week
  • the basis on which the employee is paid (hourly rate, weekly rate, “piecework”)
  • the hourly pay rate
  • the total daily or weekly earnings
  • the total overtime pay
  • any additions or deductions from the employee’s wages
  • the total wages paid for each pay period
  • the date the employee is paid and the pay period the payment covers

Even employers who try to keep accurate records make mistakes. That’s why it is important for employees to keep their own records of the time they begin and end their work day, and any meal or rest breaks taken. If your employer requires that you sign a document acknowledging your paycheck is accurate before you can get your paycheck, read that document carefully and check the employers’ record of the hours you worked against your own record.


Federal law does not require rest breaks but, if your employer gives you rest breaks (which are generally for between 5 and 20 minutes), you are entitled to be paid for that time. The break time is included in the total hours you work and counts toward overtime.

If you take more break time than your employer allows, that extra time will not be counted toward the total hours you work. That is the case as long as your employer has clearly communicated that rest breaks can only last for a certain period of time, that any longer break time is against the employer’s rules, and that any extension of the break will be punished.

Employees should keep track of the hours they work, as well as their break time, even if they punch in and out on the employer’s time clock. That way, in case of a dispute with an employer over the hours worked or break time taken, the employee has his/her own record of the time worked.

Have you been paid for all of your rest break time? Have you received all of the regular hourly pay and overtime pay to which you are entitled? If not, tell us your story.

Photo by Steve Snodgrass, available under a Creative Commons Attribution License.

The rights of a group of Wal-Mart and Sam’s Club employees were vindicated in a June 10, 2011 ruling by the Superior Court of Pennsylvania in an employment class action. The appellate court upheld the $150,000,000 judgment in favor of 187,000 Pennsylvania hourly employees and said there was enough evidence to conclude that Wal-Mart had breached its contract with its hourly employees and violated Pennsylvania’s state labor law.  Wal-Mart, which failed to compensate its employees for hours worked off-the-clock work and missed rest breaks, as mandated by its own corporate handbook and policies, violated its contract with its hourly employees and violated Pennsylvania’s labor laws.

Wal-Mart told its employees to stop clocking in and out for their breaks. In fact, there was evidence that Wal-Mart changed this policy specifically to eliminate the type of “smoking gun” evidence that would have shown widespread break violations. So, if employees weren’t clocking in and out for breaks, how were they able to prove they didn’t get their breaks?

The employees relied on Wal-Mart’s records from before the policy change (when employees were still clocking in and out for rest breaks) to derive the number of break violations that occurred after the policy change.

Likewise, there was no readily-available evidence to demonstrate that employees were working off-the-clock. And yet, the employees were still able to persuade the jury and, later the appellate court, that’s exactly what was going on.  Trial evidence showed that some employees were logging on to cash registers earlier and later than they were clocking in and out for their shifts. The employees used those records to estimate the amount of time the rest of the class was working off-the-clock.

Both the trial court and the appellate court flatly rejected Wal-Mart’s argument that the very business records it used for payroll and other business purposes were so unreliable and inaccurate that the employees couldn’t use them as proof of Wal-Mart’s wrongdoing. The Trial Court called Wal-Mart’s position “unusual in the extreme.”

Abbey Spanier was co-lead counsel for the Wal-Mart and Sam’s Club employees.

If you are being deprived of rest or meal breaks or are working off-the-clock, don’t assume there’s no evidence of it. There is more than one way to skin a cat and there is certainly more than one way to prove a violation of the wage and hour laws.

What Is A Tipped Employee?

According to the FLSA, a tipped employee is someone who works in a job in which he or she customarily and regularly receives more than $30 per month in tips. A tipped employee must still earn an hourly wage equal to the federal minimum wage level. If you are a tipped employee, your employer is only required to pay $2.13 per hour but you must be getting sufficient tips to earn the minimum wage.

If the employee’s tips, combined with the employer’s direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference. Many states, however, require higher direct wage amounts for tipped employees.

Tips can be pooled among employees who customarily and regularly receive tips such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders, but may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

Are you a tipped employee?  Are you getting all your tips?  Are you making minimum wage?  If you feel you are not getting paid what you deserve I would like to hear your story?

What is age discrimination?

Age discrimination involves treating someone (an applicant or employee) less favorably because of his or her age.  The Age Discrimination in Employment Act (ADEA) only forbids age discrimination against people who are age 40 or older. Some states do have laws that protect younger workers from age discrimination.  The law forbids discrimination when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, and any other term or condition of employment. See our prior post.

Recently nine former cocktail servers at the Resort Casino in Atlantic City claim they were fired because they didn’t fit the stereotype of what a sexy woman looks like.  The women, all of whom were long time employees of Resort Casino were fired according the complaint filed because they did not meet “uniform standards”.

The fired cocktail waitresses alleged the casino ordered them to dress in flapper style uniforms and be photographed to judge whether they were sexy enough to keep their jobs. According to the complaint all of those fired agreed to the humiliation, but were then dismissed in favor of much younger women.

If you have experienced this kind of discrimination in the workplace, I would like to hear your story.

Who is entitled to overtime pay?

The Fair Labor Standards Act requires overtime to be paid to covered and nonexempt employees at a rate of not less than one and one-half times an employee’s regular rate of pay for all hours work in above 40 hours in a workweek.   So if your hourly pay rate is $10.00 per hour, your overtime hourly rate is $15.00 per hour.  There is no Federal Law limiting the number of hours an employee can work unless the employee is a minor.  So overtime pay can add up to a lot of money if you work a lot of overtime so sometimes employers don’t like to pay it.

An employee who is paid on an hourly basis is usually considered to be covered and nonexempt employee, regardless of the hourly rate paid. Employees are also nonexempt if they do not qualify for one of several white-collar exemptions or are salesperson working on a commission.

Here are a few examples of what an employer might do to avoid paying overtime:

  • Employers misclassifying an employee as exempt when they really are a nonexempt employee.
  • Employers refusing to pay overtime because the employee gets a salary.
  • Require employees to work off the clock so that it looks like they are working less than 40 hours.

Examples of working off the clock include:

  • An employee who is forced to “clock out” but is required to continue working.
  • An employee is required to do work before “clocking in”.

Very recently the Second Circuit stated that “Age Discrimination is illegal, regardless of whether it is targeted at certain jobs.”  Age Discrimination involves treating someone less favorably because of his or her age.  The Age Discrimination in Employment Act forbids age discrimination against people who are age 40 or older.

The Second Circuit in O’Reilly v. Marina Dodge, Inc., concluded that a 59 year old auto service department employee was fired in favor of a 36 year person.  The Second Circuit was not impressed with the argument that there were older employees working in other departments. The Court said:

Although people above age 59 worked at Marina Dodge after O’Reilly was fired, none worked in the Service Department. A reasonable jury could find that Marina Dodge did not (and does not) believe that older people are unsuited for all work at Marina Dodge – but that Marina Dodge believed that such people are unsuited for high-pressure sales work in the Service Department, including convincing customers to pay for more (and more expensive) maintenance or repairs. Age discrimination is illegal, regardless of whether it is targeted at certain jobs.

Here are just a few examples of potentially unlawful age discrimination:

*    You didn’t get hired because the employer wanted a younger-looking person to do the job.

*    You were fired because your boss wanted a younger sales force who are paid less.

*    Before you were fired, your supervisor made age-related remarks about you, such as “when are you going to retire” or “dead wood.”

If any of these things have happened to you on the job, you may have suffered age discrimination.

Today, U.S. Sens. Al Franken (D-Minn.), Richard Blumenthal (D-Conn.) and U.S. Rep. Hank Johnson (D-Ga) are introducing the Arbitration Fairness Act, which will eliminate forced arbitration clauses in employment, consumer, and civil rights cases, and allow consumers and workers to choose arbitration after a dispute occurs. The text of the bill has not yet been released, but we look forward to seeing it soon.

The Arbitration Fairness Act, which was proposed in 2009 but did not become law, is being re-introduced in response to the Supreme Court’s decimation of consumer class actions in AT&T Mobility v. Concepcion.  We couldn’t better sum up the effects of Concepcion than Senator Franken did on his website:

“The majority of the Court held that the Federal Arbitration Act barred state courts from protecting consumers from [forced] arbitration clauses. The effect of this decision essentially insulates companies from liability when they defraud a large number of customers of a relatively small amount of money.”

These are not empty words. The effect of the Concepcion decision is real, although it may be hard to visualize until something goes wrong for you and you are left to fight a billion-dollar corporation, on your own, over a contested $50 charge on a phone bill. Some arbitration clauses have exceptions allowing consumers to bring cases in small claims court on an individual basis–but rest assured that the company will send its lawyers to defeat your claims (and the filing fee alone might not justify your time).  Go to arbitration, and you’ll appear before a paid dispute resolution professional who gets an awful lot of business from your adversary, and whose decisions are only minimally reviewable in court.  Talk to the press, and the big company will have its lawyers threaten you with a defamation suit. Does that sound far fetched? It’s not–it happened in one of our cases, and the threat was meritless and calculated to silence our client.

The only way consumers can fight for their rights are by banding together, and the Supreme Court has effectively taken that right away.  So, thank you Senators Franken, Blumenthal and Rep. Johnson for introducing this bill. It’s nice to see that someone has consumers’ interest in mind.

Concepcion is not the only recent Supreme Court decision that has come out on the side of corporate interests (see Citizens United, which allowed unlimited political donations by corporations).  So, although members of Congress can introduce a law overruling Concepcion, other elected representatives may choose to allow their biggest contributors the free reign that they have recently been handed.  We hope not.  In America, consumer spending amounts to about 70% of our economy.  In one slash of the pen, the Supreme Court disenfranchised this majority.  Maybe we should take a cue from the satire newspaper the Onion, which last October ran a story titled “American People Hire High-Powered Lobbyist to Push Interests in Congress.”

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It’s no secret that employers often tell their employees they won’t be paid for more than 40 hours of work per week. Many employees follow their employers’  instructions not to record more than 40 hours on their weekly time sheets and work “off-the-clock”. But just because an employee is told he will not be compensated for that time does not mean the employee is not entitled to compensation.

Under the Fair Labor Standards Act, employees are entitled to receive unpaid overtime. To establish a claim for unpaid overtime, an employee must prove that he performed work without proper compensation and that the employer knew or had reason to know of that work. Even if the employee has not kept precise records of the overtime work, courts may allow the employee to estimate the amount of overtime based on the employee’s own recollection. The fact that an employee is required to submit time sheets does not necessarily preclude payment for uncompensated time when the employee has under-recorded his time at the employer’s direction. That is what a federal circuit court  recently said in Kuebel v. Black & Decker, Inc., Docket No. 10-2273-cv.

If you have worked off-the-clock and not been paid for that time, tell us your story.


All over the U.S. and around the world, current and former employees of Sodexo are coming forward and fighting against low wages, poor working conditions and discriminatory treatment by the company. Abbey Spanier, LLP applauds the brave actions of these individuals as they fight for a fair wage and decent working conditions.

The Service Employees International Union (“SEIU”) has reported that seven states have filed unfair labor practice charges against Sodexo.  The SEIU is activity trying to educate the public about the working conditions at Sodexo.

After interviewing Sodexo employees in five countries TransAfrica Forum[1] found widespread problems of poor working conditions and unpaid wage issues.

Several class actions have been filed on behalf of particular current and former Sodexo workers in California and at St. Lukes and Good Shepherd hospitals in Pennsylvania.  According to the complaint filed on behalf of workers at St. Lukes and Good Shepherd, the company forced workers to work 15 to 45 minutes off the clock and work through breaks without getting paid for this time.

Most recently, students at Ursinus College rallied together to help support Sodexo workers suffering from poor working conditions and low wages, and circulated the following:

The actions of the individuals who brought these cases may help bring change to the way Sodexo treats its workers here in the U.S and the entire world, but more has to be done.   If you believe that you are being cheated out of wages for hours worked or are being forced to work off the clock or through your meal breaks, please tell us your story.  Abbey Spanier has extensive experience in representing current and former employees of large corporations who have been denied compensation in violation of the federal and state labor law.

Abbey Spanier is a lead counsel in Braun and Hummel v. Wal-Mart Stores, Inc. This class action was brought on behalf of 186,000 current and former hourly employees of Wal-Mart in Pennsylvania.  Common Pleas Judge Mark I. Bernstein affirmed a $185 million award against Wal-Mart in this class action.  Judge Bernstein’s opinion said that the appeals court should affirm a jury verdict finding over 186,000 current and former Pennsylvania Wal-Mart employees were not properly compensated for off-the-clock work and missed rest breaks between March 19, 1998, and May 1, 2006.  The jury expressly found that Wal-Mart did not act in good faith because it did not pay class members for missed rest and rest breaks and off the clock work.

[1] According to its website, TransAfrica Forum is the “oldest and largest African American human rights and social justice advocacy organization promoting diversity and equity in the foreign policy arena and justice for the African World.”

It seems that restaurant workers are in a constant battle for their rights, despite the laws in place to protect them. A recent example is discussed in James Barron’s April 19, 2011 New York Times blog post about employees at the Boathouse restaurant in Central Park. The claims of confiscated tips, unpaid overtime and unpaid uniform allowances have escalated into a fight between the restaurant, and the workers and their union, the New York Hotel Trades Council. The same issues pervade the restaurant industry, with or without union involvement.

As we have discussed in previous blog posts, including one earlier this week, New York law is designed to address unfair and illegal treatment of restaurant workers. In addition to making it clear that tips belong to the wait staff and overtime must be paid, New York’s Hospitality Wage Order specifically addresses when an employee is entitled to be paid for uniform costs and care and the applicable rate. For example, if an employee is required to purchase a uniform, the employer is required to reimburse the employee by the next payday. Unless a uniform is “wash and wear” or subject to certain other exceptions, employees are entitled to  be reimbursed a specific amount per week for uniform maintenance, based on the hours they work.

The number of restaurant employee issues just continue to mount.

If  customers ask whether the gratuity is included in their meal bill, some restaurant wait staff have been told by their employers: Answer and you’re fired! And, for some employers, that’s been part of a profitable—if illegal—practice to deprive wait staff of tips because customers don’t understand that the “service charges” they pay aren’t going to the wait staff.

Under New York’s Labor Law § 196-d and New York’s Hospitality Wage Order, effective January 1, 2011( the October 2010 proposal of which was discussed on this blog last November), employers violate the law when they lead their restaurant patrons to believe that a charge for an item as “service”or “food service” is a gratuity, but don’t pay that gratuity to their wait staff.

 We’ve found that muzzling the wait staff so they can’t set the record straight—even if the customer asks about it—is often a major red flag.

Have you had this experience as a restaurant customer or employee?

Over the past few years, many questions have been raised about whether employees can be disciplined or fired for using Facebook, Twitter or other forms of social media to say unflattering things about their workplace and/or their superiors.

The National Labor Relations Board ( an independent federal agency which, among other things, remedies unfair labor practices committed by employers and unions in the private sector) has started to speak out against employers who improperly restrict their employees’ use of social media. For example, last fall, the NLRB issued a complaint against American Medical Response of Connecticut because it fired an employee who posted negative comments about her supervisor on Facebook. The NLRB said that the employer’s rules (which were in its employee handbook) about blogging, Internet posting and employee communications were too broad. The Company settled with the NLRB after agreeing to revise its rules so that it didn’t improperly restrict employees from discussing their pay, hours and working conditions when they are not at work. The company also promised that employees would not be threatened with disciplinary action for seeking union representation, another “no no.”

Last week, the NLRB jumped into the social media fray again when it told the Newspaper Guild, the union that represents Thompson Reuters employees, that it was going to challenge Reuters’ social media policy which unlawfully chills employees’ rights to discuss working conditions with co-workers. Reuters had verbally disciplined an employee who used Twitter to discuss working conditions with her co-workers

Under Section 7 of the National Labor Relations Act, employees have several rights, including the right to engage in activities for their “mutual aid or protection”, and employers cannot take any action, including limiting the appropriate use of social media, to take away those rights.

What do you think?  Should employers be allowed to impose restricting on your use of  social media?

Today is Equal Pay Act day.

President Obama proclaimed April 12, 2011, as National Equal Pay Day. He called “upon all Americans to recognize the full value of women’s skills and their significant contributions to the labor force, acknowledge the injustice of wage discrimination, and join efforts to achieve equal pay.”

On June 10, 1963, President John F. Kennedy signed into law The Equal Pay Act.  This Act amended the Fair Labor Standards Act.  The EPA was enacted to “prohibit discrimination on account of sex in the payment of wages by employers.”  The Act protects both men and women.  It also protects administrative, professional and executive employees who are exempt under the Fair Labor Standards Act.

However, there are still disparities in wages.  According to the Presidential proclamation “when the Equal Pay Act was signed into law in 1963, women earned 59 cents for every dollar earned by men. Though women today are more likely than men to attend and graduate from college, women still earn an average of only about 77 cents for every dollar a man earns.”

On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act, which overturned the holding of a Supreme Court case, Ledbetter v. Goodyear, regarding the applicable statute of limitations. This bill, which provides that each gender-unequal paycheck is a new violation of the law, was the first signing of the Obama Presidency and came almost forty-five years after the Equal Pay Act.

In Ledbetter, the Court held that employers could not be sued for pay discrimination under Title VII of the Civil Rights Act of 1964 if the employer’s original discriminatory pay decision occurred more than 180 days before the employee initiated her claim.  The Court concluded that the paychecks Ledbetter continued to receive from her employer were mere “effects” of her employer’s earlier discriminatory decisions, and so did not “reset” the 180-day filing period.  See our prior posting:

Are you getting equal pay?  What policies are in place at your place of employment to assure equal pay?

 Given the difficult economic times, college students and unpaid internships have become virtually synonymous. This presents a host of issues for students and other members of the nation’s workforce, 8.8% of whom are unemployed, according to the Department of Labor’s most recent statistics.

While some internships provide real academic experience, others may result in the displacement of people who need paying jobs and otherwise run afoul of the federal labor law. An April 3, 2011 Op-Ed piece by Ross Perlin in The New York Times, entitled “Unpaid Interns, Complicit Colleges”, addressed what he described as “A troubling bargain: school credit for work.” The article highlights concerns over the fact that millions of college students work as unpaid interns, including possible exploitation of the students and the motivation of  some colleges to give credit for internships because internships cost less than classes which require facilities and faculty.

The Department of Labor has established the following criteria to determine whether an unpaid internship in the for-profit sector will be permitted, or whether an “employment relationship” exists, requiring the employer to pay the intern the minimum wage and overtime:

 1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

 2. The internship experience is for the benefit of the intern;

  3. The intern does not displace regular employees, but works under close supervision of existing staff;

 4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

 5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Given the extremely difficult job market facing today’s college graduates, one wonders how they will enter the job force unless they have the kind of experience many can only obtain via unpaid internships. As we all know, it’s hard to get experience when you don’t have any.

The federal Fair Labor Standards Act (“FLSA”) requires that employers pay employees at least the minimum wage for each hour worked, and overtime for hours worked in excess of 40 in any workweek. The FLSA also provides protection from retaliation, such as termination, to employees who make a complaint about minimum wage and/or overtime violations. However, until the Supreme Court ruling last week it was unclear whether the an employee making an informal oral complaint was entitled to the same FLSA anti-retaliation protections. 

The Supreme court in Kasten v. Saint-Gobain Performance Plastics Corp., ruled that the FLSA’s anti-retaliation provision did not only protect employees filing written claims in court or with the Department of Labor, but also employees who submit informal oral complaints.

The FLSA’s anti-retaliation provision forbids employers “to. . . discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the FLSA].” FLSA § 215(a)(3)(emphasis added).

The Court ruled that the language, “filed any complaint” was broad enough to include informal oral complaints.

Answer: People are still getting injured and killed on the job because their employers fail to comply with safety laws. 

After the Triangle Shirtwaist Fire of 1911 many state and federal laws were enacted to help protect workers. Once the New York legislature enacted safety laws, other states did as well.  Also, workers began to unionize to have a collective voice to express their concerns over safety and pay.   However, even though  today there are many laws that govern the condition of workplaces some employers still create dangerous situations for employees and even customers.  For example, on March 25, 1990, the 79th anniversary of the Triangle Shirtwaist Fire, 87 people were killed in the the Happy Land Social Club fire in the Bronx, New York. Most of the people killed in this tragedy were not workers but customers.   Their deaths were due to things like no sprinkler system or fire alarms in the building. The windows had iron bars on them.  There was only one door for people to use.   

Another example, is the fire in a North Carolina poultry factory on September 3, 1991 that killed 25 workers. The exits were ill marked, blocked and the doors were padlocked to prevent theft.

And most recently, the $65 million “Spider-Man: Turn Off The Dark” Broadway musical has been investigated by OSHA after an actor was injured when he fell 30 feet into a stage pit.  The accident was the fourth serious job related injury on the set of the show.  As a result of the investigation, OSHA issued three citations to the show.  According to OSHA, the cast had been exposed to “the hazards of falls or being struck during flying routines because of improperly adjusted or unsecured safety harnesses.” 

The Triangle Shirtwaist Fire remains as a turning point in US history and even though employers have clear standards established by OSHA to ensure the safety of employees, we know that these laws are broken everyday putting people’s lives in danger.  Is your employer putting you in harms way?

The anniversary of the March 25, 1911 Manhattan Triangle Waist Factory fire is generating a good deal of discussion in the media, as it should. While the story is familiar to many people, particularly those who fight for employee rights, it is not only a reminder of the progress we have made in worker protection, but the need for employee protection to remain in the public eye.

 The Triangle Waist Company made its owners rich, primarily through the exploitation of their approximately 500 primarily female immigrant employees, many of whom were 13 or 14 years old and worked long hours, six days each week.  146 of those employees were killed in the fire which exposed the dangerous work conditions that existed in innumerable multi-story factories. As a result, New York and other cities passed a number of laws aimed at addressing the physical safety issues presented.

 Interestingly, two years before the fire, shirtwaist workers around the New York area went on strike to obtain better pay, improved working hours and union recognition. While some of those companies acceded to their employees’ demands, Triangle did not. Whether any of those changes would have avoided the fire or resulted in fewer deaths is unknown. What we do know is that employee rights remain as important today as they were in 1911.  Each of us is undoubtedly aware of more than one situation in which employees are being unfairly or unlawfully treated, despite the federal and state laws that exist for their protection. Unionization in Wisconsin and Indiana has become  a lightening rod for discussion, but that is hardly the only issue American workers face. This country has operated under certain core concepts which include an honest day’s work for an honest day’s pay and fair treatment for all. When we fail to protect our workers, we have cheated everyone.

YOUR PAY STUB – Required Information

As previously discussed the WTP Act will take effect on April 9, 2011 and amends the New York Labor Law in many ways.  The WTP Act significantly expands the information that employers must provide their employees with every pay stubs.   

Effective April 9, 2011a statement in connection with the payment of wages that lists certain information including:

 the dates of work covered by that payment of wages;

the employer’s name, address and phone number;

the employee’s name;

the employee’s rate or rates of pay and the basis thereof;

whether the employee is being paid by the hour, shift, day, week, salary, piece, commission or otherwise; 

allowances, if any, that the employer claimed as part of the minimum wage;

the employee’s net and gross wages;

deductions from such wages.

 Moreover, for non-exempt employees, the statements must also include the employee’s overtime pay rate and the number of regular and overtime hours that the employee worked.

 Make sure your employer is providing you with all the required information and if you are not getting all the information listed above, ask for it.  If your employer fails to provide a wage statement containing the required information, the employee may be entitled to recover $100 per week for each work week the violation occurred up to a total of $2500, plus costs and attorneys fees.

In several recent posts (click here or here), we’ve focused on court decisions that found arbitration clauses and class action waivers unconscionable (unfair) and unenforceable in the context of consumer class actions.  Today, we highlight an arbitration clause decision that arose in a different context: the employment class action.

In Arrigo v. Blue Fish Commodities, Inc., the plaintiff sued his employer, Blue Fish Commodities, for failure to pay overtime pursuant to the federal Fair Labor Standards Act and New York Labor Law.  The plaintiff brought his action in federal court.   Blue Fish moved to have the case arbitrated because the plaintiff signed an employment agreement that contained an arbitration clause.  The court dismissed the action and sent it to arbitration.

On appeal, the Second Circuit affirmed.  In doing so, the court declined to reach the plaintiff’s argument that the arbitration clause was unconscionable  and should not be enforced against him. The agreement stated that the arbitrator would have  “exclusive authority” to resolve any dispute concerning the enforceability of the agreement.  Based on the language in the arbitration clause, the court held that unconscionability was for an arbitrator, and not for the court to decide.   So, although the plaintiff advanced a strong argument to show he had no choice but to sign the contract—that Blue Fish forced him to choose between signing and losing his job—the court did not believe it was in a position to decide the question.  More than eighteen months after commencing his case, the plaintiff must now start over again in arbitration.

The lesson from Arrigo is that an employee should learn about the meaning of each term in an employment agreement before signing it.  Employers have the upper hand in these situations. Mr. Arrigo signed his employment agreement three months after he began working. In an “at will” employment state like New York, an employer can fire an employee at any time unless the employee has a  contract that says otherwise.  Employers may have attorneys draft employment agreements, and these agreements may have terms that are favorable to the employer and come back to haunt an unsuspecting employee in the event of a dispute.  Before you sign an employment agreement, do the research on your own or consult an attorney, if possible.

New York’s Wage Theft Prevention Act

The New York Labor Law entitled the Wage Theft Prevention Act (the “WTP Act”) becomes effective on April 9, 2011.   The WTP Act modifies numerous sections of the New York Labor Law and imposes new record-keeping and notice obligations on employers.  In summary the WTP provides, among other things, that:

  • Written pay notices that must be given to all employees annually.
  • Seven-day advance written notice of any pay changes.
  • Broader remedies for retaliation against employees who make wage complaints.
  • Expanded criminal penalties for violators of the New York Labor Law.
  • Increases in penalties and fines for violations of the New York Labor Law.

The WTP Act expands the requirement that employers give written statements setting out an employees pay days, pay rates and, if nonexempt, their overtime rates of pay to include also include:

  • the basis of the individual’s rate or rates of pay (i.e., hourly, shift, daily, weekly, salary, piece, commission or other).
  • allowances claimed, if any, as part of the minimum wage.
  • the name of the employer, including any “d/b/a” names.
  • the physical address of the employer’s main office or principal place of business, and a mailing address if different.
  • the telephone number of the employer.
  • “such other information as the commissioner deems material and necessary.”

These notices must be provided in both English and the employee’s primary language (as identified by the employee, but only to the extent a form in that language is issued by the Department of Labor.

The employer must provide its employees with follow-up notices containing this information every year, on or before Feb. 1.

Equal Employment for All

Do you have a less than stellar credit rating? Is this due to reasons beyond your control? Have you lost your job because your employer went out of business? Was your credit history destroyed because you were the victim of identity theft?

As more employers use credit checks to investigate potential employees, a bad credit history may harm your ability to get a job.  According to a survey by the Society for Human Resource Management, approximately 60% of its employer members used credit checks as a hiring tool in 2009. Society for Human Resource Management, Background Checking: Conducting Credit Background Checks, January 2010.  Credit information does not necessarily predict job performance or risk of theft in the workplace. Two industrial and organizational psychologists, Dr. Jerry Palmer and Dr. Laura Koppe, conducted a study which included examining the credit reports of nearly 200 current and former employees working in the financial service areas of six companies. They sought to determine if the credit ratings, which covered only the two previous years, were an indicator of how well the workers performed their jobs and of whether they stayed, or were likely to remain, with their organizations. The results showed that a person’s credit history is not a good predictor of job performance or turnover. Http://

The United States Equal Employment Opportunity Commission (the EEOC) has stated that rejecting applicants on the basis of financial criteria such as poor credit ratings has sometimes been found to disproportionately exclude minority groups. In fact, on December 21, 2010, the EEOC filed a nationwide discrimination lawsuit against Kaplan Higher Education Corp. alleging that Kaplan’s rejection of job applicants based on their credit history had an unlawful discriminatory impact because of race and was neither job-related nor justified by business necessity.

Never fear; legislation is here! Recognizing the harmful impact that employers’ use of credit reports can have, so far four states (Washington, Hawaii, Illinois and Oregon) have enacted laws prohibiting employers from using credit checks against employees.  Even the federal government is stepping up.  U.S congressman Steve Cohen of Tennessee proposed H.R. 3149, the Equal Employment for All Act, in July 2009.  That bill, which would amend the Fair Credit Reporting Act to prohibit use of consumer credit checks against prospective and current employees for purposes of making adverse employment decisions, except in certain specific circumstances, was re-introduced on January 19, 2011 as HR 321.  Hopefully, this bill will pass so that we can be protected from unfair employment decisions based on our credit scores.

These days, it seems you need a law degree to follow baseball–Barry Bonds goes on trial soon, as does Roger Clemens, the Mets’ Francisco Rodriguez got in trouble last year….just to name a few.
And now comes a lawsuit brought against the New York Yankees’ Triple A affiliate by Brian Bonner, a/k/a “Champ” the mascot. Mr. Bonner claims that, in addition to his administrative duties with the Scranton/Wilkes-Barre Yankees, he also worked as Champ and put in as many as 80 hours a week. And in return the team paid him a salary of $22,000, classified him as a “manager”, and did not pay him time and a half for hours worked over 40 per week.  Mr. Bonner claims that he was misclassified and is not a manager.  He therefore claims that the team’s failure to pay overtime was a violation of the Fair Labor Standards Act.
If Mr. Bonner is correct that he was misclassified as a manager, the team has some explaining to do.  How, exactly, can a mascot be a manager? And, although the New York Times reported that the team disputes the allegations, the team’s website favors Champ: he is quoted as saying that, since joining the team in July, 2010, “I’ve been the hardest working Yankee in the farm system.”


January’s record snow fall affects more than our aching backs. While these storms may mean no school or homework for days, giving happy children a chance to sled and make snow angels, they also adversely impact many businesses and hourly workers. When people are unable to get to work, they also do not shop and restaurants remain empty as people hunkered down in their homes. This translates into big revenue hits for small businesses. While many salaried workers are paid, despite the shutdowns, hourly wage earners suffered a direct and immediate hit to their paychecks. Hourly workers who cannot get to work don’t get paid.

A 2010 study by IHS Global Insight, a Boston-based economics consulting firm, found that hundreds of millions of dollars in economic opportunity are lost each day that a state is snowed in and the roads are impassable.

The study which examined the economic impact of snowstorms in 16 U.S. states and two Canadian provinces, showed:

  • A one-day major snowstorm can cost a state $300 to $700 million both direct and indirect costs.
  • Among all economic classes, snow-related shutdowns harm hourly workers the most, accounting for almost two-thirds of direct economic losses and representing America’s most economically vulnerable demographic.

“Lost wages of hourly workers account for about two-thirds of the direct economic impact of a major snowstorm,” said James Gillula, Managing Director of Global Insight and the principal researcher of the study. “Among all workers, hourly wage workers can suffer the most painful economic losses and the indirect economic effects of their lost wages can ripple through the economy.”

The New Jersey Supreme Court ruled in a recent decision that plaintiffs could proceed in their case against Seton Hall University, a private Roman Catholic university in South Orange, New Jersey, and certain school officials alleging violations of the New Jersey Law Against Discrimination (the “LAD”) for age and gender based discrimination.  Alexander, et al. v. Seton Hall University, et al., No. A-87-09, 2010 N.J. LEXIS 1229 (N.J. November 23, 2010).  In doing so, the Court reversed the New Jersey Appellate Court’s finding that plaintiffs’ case was untimely under the United States Supreme Court decision Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), a decision concerning alleged violations of Title VII of the 1964 Civil Rights Act (“Title VII”), and chastised the Appellate Court for “succumb[ing] to the draw of aligning our LAD jurisprudence to that which was developing under federal case law.” Id. at *27-28.

Plaintiffs,  three tenured female professors at Seton Hall University, all of whom are over 60 years old and boast decades of service to that institution, initiated this action in 2007 after obtaining a 2004-2005 annual report compiled by Seton Hall that detailed the salaries of its full-time faculty members.  That report revealed that higher salaries were paid to newer, younger faculty members as compared to those paid to long-term, older faculty members.  A gender based pattern of disparate compensation was also apparent.  Plaintiffs allege that they were the victims of discrimination in violation of the LAD, but also that age and gender based discrimination permeates several departments of the University.

The University’s position was that plaintiffs’ action was not timely because the violation, to the extent it occurred at all, “accrued as a discrete act of the discriminatory animus when the wage was established,” which was decades prior to filing of plaintiffs’ claims and well beyond the statue of limitations period. Id. at 18.  Plaintiffs argued to the contrary that “each paycheck that perpetuates a discriminatory wage continues the original LAD violation and sweeps in all prior and current discriminatory, disparate paychecks” and on that basis that plaintiffs were entitled to equitable relief from the two-year statute of limitations. Id.

What plaintiffs sought to do was import the continuing violation doctrine applied in hostile workplace cases into wage discrimination cases brought under the LAD.  It was not a new idea.  Plaintiffs in Ledbetter made a similar argument with respect to Title VII to the U.S. Supreme Court, but it was rejected. The Supreme Court specifically “rejected[ed] the suggestion that an employment practice committed with no improper purpose and no discriminatory intent is rendered unlawful nonetheless because it gives some effect to an intentional discriminatory act that occurred outside the charging period.” Ledbetter, 550 U.S. at 632.

Although it ran contrary to the well-established jurisprudence of the state, the New Jersey Appellate Court applied Ledbetter to plaintiffs claims against Seton Hall: “As our Supreme Court has followed Title VII jurisprudence in interpreting our LAD, we follow the United States Supreme Court’s holding in Ledbetter in this similar pay discrimination case.” Alexander v. Seton Hall University, 410 N.J. Super. 574, 587 (App.Div. 2009).

The New Jersey Supreme Court was not pleased.

In reversing the Appellate Court’s ruling, the Court found first that Ledbetter no longer represents federal policy with respect to Title VII claims following passage by Congress of the Lilly Ledbetter Fair Pay Act of 2009 amending Title VII, which clarifies that an unlawful act occurs “each time wages, benefits, or other compensation [are] paid” resulting from an earlier discriminatory practice. 42 U.S.C.A. § 2000e-5(e)(3)(A).  The Court found that “[i]t would be an odd step to bring this state’s jurisprudence into conformity with case law that has been rendered obsolete.” Alexander, 2010 N.J. LEXIS 1229, *33. But, even “as it stood prior to the time Congress altered the federal landscape,” it failed to see the “allure” of aligning the state’s jurisprudence with federal case law. Id. at *28.

More important to the Court was its finding that New Jersey already has a developed approach to wage discrimination claims.  “Consistent with the LAD’s strong promise to eliminate discrimination from the workplace [New Jersey decisions treating the payment of discriminatory wages] reflect the public policy of this state to treat each issuance of a pay check that reflects discriminatory treatment toward a protected group as an actionable wrong under the LAD.” Id. at *29.

This case represents an unmistakable statement from the New Jersey Supreme Court that it will push back on unwarranted efforts to supplant the state’s jurisprudence with that arising under federal law.  Not only does the Court refer to the LAD as “our LAD” throughout its opinion, as if to mark its territory in the subconscious of the readers’ minds, but, ultimately, it held that the utility of federal jurisprudence in interpreting the LAD should be relegated to addressing “novel” issues that the state courts have not already figured out:

In sum, we reject the sea change that would be effected were we to adopt the Ledbetter majority approach to wage discrimination claims under our LAD. In light of settled prior case law that treated payment of unequal wages in violation of our anti-discrimination law as a series of actionable wrongs under the LAD, which are subject to the two-year statute of limitations, we see no persuasive reason for adopting the Ledbetter majority’s restrictive approach to the vindication of a plaintiff’s right to relief under the LAD for wage discrimination. Although we have turned for guidance to federal Title VII law when navigating new, uncharted paths as novel LAD issues have arisen, see, e.g., Carmona v. Resorts Int’l Hotel, Inc., 189 N.J. 354, 370, 915 A.2d 518 (2007) (stating, “we have frequently looked to case law under Title VII . . . for guidance in developing standards to govern the resolution of LAD claims” (citation omitted)); Lehmann v. Toys ‘R’ Us, Inc., 132 N.J. 587, 600, 626 A.2d 445 (1993) (calling federal Title VII precedent “a key source of interpretive authority” when construing LAD (citation omitted)); in the present matter, federal guidance is not necessary to settle any complicated legal issue under our LAD.

Alexander, 2010 N.J. LEXIS 1229, *31-2.  This case is a major victory for plaintiffs, but may also be important to LAD litigators generally.  Plaintiffs’ burdens in, for example, discrimination cases under New Jersey state law, are less onerous in many respects when compared to similar federal laws.  As a consequence, although the courts in the state will continue to look to federal jurisprudence for guidance, this opinion may help to maintain the state’s plaintiff-friendly status.

And They Call It The Sunshine State?

 In a December 14, 2010 post, we talked about the best states for minimum wage earners. Right now, Florida doesn’t look very sunny to its minimum wage earners. 

Ten states’  minimum wages  are linked to a consumer price index(AZ,CO, MO, MT, NV, OH, OR, VT and WA). As a result, their minumum wages are usually increased annually. This year, 7 of those states increased their minimum wages. Florida, Missouri and Nevada did not.

Under Florida law, the inflation adjustment is appled yearly to a $6.15 per hour minimum wage which became effective in 2005. Before that, Florida didn’t have a minimum wage. If the state minimum wage is determined to be less than the federal rate, the federal rate prevails.

According to a lawsuit recently filed agaisnt the State of Florida in the Ciruit Court for the Second Judicial Circuit of Florida, the State’s Agency for Workforce Innovation was wrong when it set the 2011 minimum wage rate at $7.16 per hour-less than the $7.25 per hour federal rate. That error resulted from a mistake that was originally made when the cost of living decreased slightly from 2008 to 2009 and the minimum wage rate also decreased. The plaintiffs argue that the minimum wage rate should only increase under the applicable Florida law. Even with a cost of living increase in 2010, the 2011 rate is too low because the wrong base was used in its calculation. Applying a 1.4% cost of living increase to the right 2010 base rate of $7.21 yields the right hourly rate of $7.31. If the plaintiffs are correct, thousands of Floridians are already being underpaid.

We’ll be watching this case and we’ll report on its progress.


On November 3, 2020, the Securities and Exchange Commission (“SEC”) issued a Rule Proposal for implementing a whistleblower program under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).

By way of background, prior to Dodd-Frank, employees were encouraged to “blow the whistle” on their employers by reporting fraud to the SEC but did not have very much financial incentive to do so.  The SEC’s whistleblower program was limited to insider trading cases and the awards given were often small and discretionary.

However, Dodd-Frank is a game changer.  Dodd-Frank broadens the SEC’s whistleblower program to include all kinds of federal securities violations, including accounting fraud.  Most important, however, is the promise of large and mandatory bounties – up to 30% of the recovery – for those who furnish the SEC with useful and original information, subject to certain conditions.

Under Dodd-Frank, a potential whistleblower must voluntarily provide the SEC with original information that leads to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million.  If these conditions are met, then the whistleblower will be awarded 10% to 30% of the total recovery.  Dodd-Frank also prohibits retaliation by employers against whistleblowers. What do these conditions really entail?  Well, the SEC’s Rule Proposal addressed that in great detail. The Proposal is over 150 pages, but the SEC’s website provides a Fact Sheet with a good synopsis:

 Voluntarily provide the SEC … 
  • In general, a whistleblower is deemed to have provided information voluntarily if the whistleblower has provided information before the government, a self-regulatory organization or the Public Company Accounting Oversight Board asks for it.

… with original information … 

  • Original information must be based upon the whistleblower’s independent knowledge or independent analysis, not already known to the Commission and not derived exclusively from certain public sources.

… that leads to the successful enforcement by the SEC of a federal court or administrative action … 

  • A whistleblower’s information can be deemed to have led to successful enforcement in two circumstances: (1) if the information results in a new examination or investigation being opened and significantly contributes to the success of a resulting enforcement action, or (2) if the conduct was already under investigation when the information was submitted, but the information is essential to the success of the action and would not have otherwise been obtained.

… in which the SEC obtains monetary sanctions totaling more than $1 million.  No further explanation is provided on the SEC’s Fact Sheet; however, this should be self-explanatory. 

In addition, I looked at the SEC Rule Proposal to understand how attorneys can help their clients navigate through the whistleblower program – from investigating a potential whistleblower claim to applying to the SEC for an award.  Here’s what I discovered:

Dodd-Frank allows potential whistleblowers to report fraud anonymously if they retain counsel to report the securities fraud on their behalf.  The SEC’s Rule Proposal contemplates that attorneys may not only help the whistleblower complete the SEC’s required forms for reporting fraud, but may assist in the investigation of their claims.   

Under Dodd-Frank, original information provided by a whistleblower can derive from “independent knowledge” and from “independent analysis.”  The SEC’s Rule Proposal broadly defines “independent analysis” to mean the whistleblower’s own analysis, whether done alone or in combination with others.  “Analysis” would mean the whistleblower’s “examination and evaluation of information that may be generally available, but which reveals information that is not generally known or available to the public.”  This definition recognizes that there are circumstances where individuals can review publicly available information, and through their additional evaluation and analysis, can provide vital assistance to the SEC in understanding complex schemes and identifying securities violations.

Thus, under the SEC Rule Proposal, an attorney would be able to help a potential whistleblower develop and investigate the facts provided by the whistleblower by examining their legal import and determining whether any of the facts have either been disclosed publicly or intentionally concealed.  The attorneys can also assist the whistleblower in completing  the SEC’s required forms.  Presumably, the stronger and more coherent the “tip” furnished to the SEC, the greater the likelihood that the SEC (or a collaborating federal agency) will bring an enforcement action.  An attorney’s involvement could make a potential whistleblower’s submission stand out in the mountain of complaints and tips that the SEC has begun and will continue to receive under this new and expansive whistleblower program. 

Finally, the SEC also expects that in the vast majority of cases in which a whistleblower is represented by an attorney, the whistleblower will enter into a contingency fee arrangement with the attorney, providing that counsel will be paid for the representation through a fixed percentage of any recovery by the whistleblower under the whistleblower program.  Thus, the SEC Rule Proposal explains that most whistleblowers will not incur any direct expenses for attorneys’ fees for the completion of the SEC’s required forms.  

I’m optimistic about the whistleblower program although I do think it will be difficult for the SEC’s limited staff and resources to weed out the useful and the less useful tips.



According to the EEOC, since at least 2008, Kaplan Higher Education has rejected job applicants based on their credit history. This week the EEOC sued The Washington Post’s Kaplan Higher Education unit, on behalf of a class of black job applicants alleging that Kaplan’s refusal to hire them based on their credit histories was discriminatory. The lawsuit alleges that Kaplan needlessly evaluated the potential hires’ credit histories in a way that had a disparate negative impact on black job applicants. Several states, including Hawaii, Washington, Oregon and Illinois, have banned or limited the use of credit reports in hiring.

According to the complaint, Kaplan violated Title VII of the Civil Rights Act of 1964, under which it is unlawful to use hiring practices that have a discriminatory impact and that are not job-related and justified by business necessity.

According to the EEOC’s website, charges of workplace discrimination rose to an unprecedented level of 99,922 during fiscal year 2010. Abbey Spanier believes that companies should be held responsible for discriminatory practices. Class action cases of workplace discrimination can be brought, as a result of, the unfair treatment of a protected group pf people based on race, religion, gender, sexual orientation, disability or age.

The New York State Department of Labor has issued a new wage order that affects hospitality industry workers’ pay and tips. It also addresses a variety of other items that have been the topic of discussion or litigation, ranging from payment by the employer for uniform maintainance to the records an employer is required to keep.

Under the order, tipped employees (who receive significantly lower minimum wages than the $7.25 per hour minimum wage received by non-tipped employees) will see their hourly wages increase. As of January 1, 2011, tipped food service workers will receive $5  per hour rather than the $4.65 per hour they currently receive; tipped non-food service workers who work in the hospitality industry will receive an increase from $4.90 to $5.65 per hour; and service workers who work for resort hotels will receive an increase from $4.35 to $4.90 per hour.

The wage order permits “tip pooling,”a practice in which tipped employees  contribute their tips to a common pool that is shared with non-tipped employees. Tip pooling is allowed so long as the participants regularly provide, or help provide, personal service as a principal part pf their duties.  Waiters, bus persons, bartenders, bar backs, food runners, hosts and captains or other employees who regularly provide, or help provide, personal service, are eligible for tip pooling.

Under the wage order, tips can be pooled under two circumstances; when the tipped employees mututally agree and when an employer requires food service workers to participate in a tip pool. In the latter case, the employer  can set the percentage to be distributed to each occupation.  The employer is not required to compensate tip pool participants  when a someone fails to contribute. 

Employees in restaurants and year-round hotels will receive an additional hour of pay , at the minimum hourly rate, when they work a “spread of hours’ of more than 10. For example, if someone works from 8 a.m. to 11 a.m. and then from 7 p.m. to 10 p.m., they have actually worked for 6 hours with a 15 hour spread. In that situation, the worker is entitled to an additional hour of pay. Since the additional hour of pay is not considered payment for time worked, the wage order does not require that it be included when overtime pay is being calculated.

 For future posts regarding the new wage order and its impact on the hospitality industry, follow this blog.

New York’s Wage Theft Protection Act

Beer Money at the MCAphoto © 2005 Seth Anderson | more info (via: Wylio)

The New York State Legislature just passed the Wage Theft Protection Act and it became law when Governor Patterson signed the bill.  This new law will provide New Yorkers with greater protection from overtime pay and minimum wage violations. The New York wage theft law will increase penalties, increase protection for workers who speak out about wage theft and add tools the New York Department of Labor and courts can use to investigate cases.   Under the Wage Theft Protection Act, an employer can be forced to pay wronged workers twice the amount that was due as well as other penalties and legal fees.

According to a recent study by the National Employment Law Center unscrupulous employers in New York steal more than $18.4 million a week, almost $1 billion each year, from their workers by cheating them out of minimum wages and overtime pay.   Moreover, 75% of those who work overtime are not paid the required overtime pay premium equal to time and a half and 69% of workers don’t get meal breaks.

Illinois, Washington State, Massachusetts and New Mexico have also passed similar laws to protect workers from wage theft.

According to the Department of Labor, the state of Washington has the highest minimum wage at $8.55 per hour. As of January 1, 2011, that rate will increase to $8.67 per hour worked to reflect a 1.4% increase since August 2009 in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The CPI is a national index that covers the cost of goods and services required for daily life. Nine other states-Arizona, Colorado, Florida, Missouri, Montana, Nevada , Ohio, Oregon and Vermont -adjust the minimum wage based on inflation and the CPI.

In October 2010, five of those states announced that their minimum wage will increase on January 1, 2011, as follows:

Arizona-from $7.25 to 7.35 per hour

Montana-from $7.25 to $7.35 per hour

Ohio-from $7.25 to $7.40 per hour and from $3.65 to $3.70 for tipped employees.

Oregon-from $8.40 to $8.50 per hour

Vermont-from $8.06 to $ 8.15 per hour and from $3.91 to $3.95 per hour for tipped employees.

Colorado has announced a proposed increase from $7.24 to $7.36 per hour and from $4.22 to $4.34 for tipped employees. That proposal was  the subject of a November 8, 2010 public hearing.

Minimum wage earners who are covered by the Fair Labor Standards Act benefit from these increased rates when they receive their straight hourly pay and when they receive overtime pay. FLSA overtime compensation is generally paid at one and one-half times the employees’ regular rate of pay when they work over 40 hours in a workweek.

Florida and Missouri have both announced that their minimum wage will remain at  the federal minimum wage rate of $7.25 per hour for 2011. Federal law requires that employers pay the higher of the state or federal minimum wage rate. Under Florida law, the state must calculate an adjusted minimum rate each year based on the percentage change in the CPI in the Southern Region.  Florida has determined that the CPI calculation will not affect the current state rate so its minimum wage rate will remain at $7.25 per hour.  Missouri, which calculates any change based on the CPI, rounded to the nearest five cents, has likewise determined that no change is necessary.

What does the failure to peg the minimum wage to the cost of living say about the states who choose not to do so?

Tough Guys Need Protection Too

 Photo by Paul Keleher, available under                                                                          


When you think construction worker, you think of strong men in hard hats with bulging muscles, right? Well, as it turns out, tough guys need protection, too–from their employers.

After studies showed that as many as 50,000 construction workers in New York City alone are misclassified as independent contractors rather than employees, or are employed completely off the books,  New York enacted the “Construction Industry Fair Play Act” which became effective on October 26, 2010.

Workers who are classified as” independent contractors” are deprived of important benefits owed to people classified as “employees.” Those benefits include overtime pay, unemployment insurance and workers’ compensation. Because employee benefits are costly for employers, they often misclassify workers as independent contractors to avoid payment. Hard to imagine wanting to get into a disagreement with a construction worker, but whether a person is an independent contractor or an employee has been the subject of many disputes.

In order to clarify who is an employee, the Fair Play Act presumes that a construction worker is an employee unless the worker is a separate business entity (as defined by the Act) or if: 1) the worker is free the employer’s control and direction in doing the job, both under his/her contract and as a practical matter; and 2) the service being performed by the worker must be performed outside the employer’s usual course of business; and 3) the worker is customarily engaged in an independently established trade, occupation, profession or business that is similar to the service that is in issue. The construction worker may be considered an independent contractor only if all of these three criteria are met. In other words, if the construction worker has his/her own business, performs the services sought on his/her own and also works for others independent of the work being done for the employer, the worker is considered an independent contractor.

So, for example, if Harry Hard Hat has a business installing roofs and installs roofs for several construction companies the way Harry thinks best, and on the days and times Harry chooses, Harry is most likely an independent contractor. If, on the other hand, Harry is hired by Construction Company, Inc. as a roofer, trained by Construction Company, Inc., punches Construction Company’s time clock and has no business of his own, he’s likely an employee and entitled to benefits.

So Harry, if you’re in New York, your hard hat could be all the protection you need.




On October 1, 2010, the New York State Commissioner of Labor proposed a new wage order that would combine the current Restaurant Industry Wage Order and the Hotel Industry Wage orders into a single, unified Hospitality Industry Wage Order.   There will be a 45-day period for public comment before it becomes effective and final.      

The proposed wage order is employee-friendly for a number of reasons.   One reason is that the law will presume that any charge associated with a banquet or special function (such as a wedding) on top of food and beverage purchase is a gratuity intended for the wait staff.  This presumption can be overcome if the employer provides clear, written notice to their customers that the charge is not a gratuity.     

This means it will be more difficult for catering and food service companies to trick their customers and short their wait staff by implying that fixed or percentage service charges added to the food service check or catering bill are a substitute for tips, when, in fact, none of those charges actually get paid to the food service workers.  Instead, the company must pay money collected as a service charge to the butlers, the waiters, bus boys, bartenders and any other members of the wait staff that serve its customers at a special event.  If not, the company will be in violation of the New York Labor Law, Article § 196-d which forbids an employer from retaining any part of a gratuity or “any charge purported to be a gratuity.”     

This would not be a drastic change from the current state of the law but would codify the substance of existing court decisions.  New York courts have been grappling with this problem for years: Hospitality workers don’t gets tips or get shorted on their tips because customers believe that the service charge is paid to them in lieu of a gratuity.      

In its 2008 decision, Samiento v. World Yacht, the New York Court of Appeals, the highest court in the state, held that even where a charge to a consumer is mandatory, if it has been represented to a consumer as compensation to an employer’s wait staff in lieu of a gratuity, then it must be distributed to the service employees.  The determination as to whether a mandatory charge or fee is “purported to be a gratuity” is weighed against the expectation of a reasonable customer.  If a reasonable customer believes that the service charge is a gratuity, the entire service charge must be distributed to the employees.     

Thus, the presumption that the wage order proposes doesn’t change the law significantly, but it makes it easier for an employee or a group of employees in a class action to prove that a service charge is really a tip intended for their pockets, not for their employers’.     

For more highlights on the proposed wage order, please continue to read the Abbey Spanier Blog.