Today’s Labor Updates:
Miss any of the major wage & hour law news this summer? We’ve got you covered
Trend Alert: NLRB Holds Employee Acting Alone Engages in Concerted Activity
Summary of NLRB Decisions for Week of July 27 – 31, 2015
Miss any of the major wage & hour law news this summer? We’ve got you covered
Reed Smith LLP USA August 5 2015
Developments in wage and hour law made major waves for employers this summer. They include: (1) proposed new overtime regulations from the U.S. Department of Labor (DOL); (2) an announced crackdown by the DOL on employers who engage independent contractors; (3) new federal court standards for assessing whether unpaid interns should be paid like traditional employees; and (4) a minimum wage hike for certain New York employees. For those who may have missed any of our prior reports this summer, here is a recap, with links to more in-depth analysis.
- DOL Proposes Regulations that Dramatically Expand FLSA Overtime Eligibility
On June 30, the DOL released its highly anticipated proposed revisions to the Fair Labor Standards Act’s (FLSA) overtime exemption regulations, representing the first major proposed change to federal overtime law in more than a decade.
The DOL’s proposal would more than double the minimum salary an employee must earn to even be eligible for exemption from the FLSA’s overtime pay requirements – from just under $24,000/year ($455/week) to $50,440/year ($970/week). This new salary threshold corresponds to the 40th percentile of earnings for all full-time U.S. salaried workers. In addition, the proposed regulations would allow the DOL to automatically raise the salary threshold annually, without the need for any further, formal rulemaking procedures, thereby enabling the DOL to keep pace with 40th percentile statistics as they may change going forward. The only welcome surprise for employers in the DOL’s proposal is that it does not seek to modify the “duties” tests associated with the FLSA “white collar” overtime exemption categories, although some speculate that the DOL may roll out revamped “duties” tests at a later date.
Before the DOL’s proposed regulations become final, they are subject to a public comment period (open now) and finalization. Whatever iteration of the regulations ultimately is adopted, the final regulations are not likely to take effect before mid-2016.
Click here for our prior post containing more extensive coverage and analysis.
- DOL Proclaims “Most” Independent Contractors Are Unlawfully Classified
On July 15, the DOL’s quest to expand the number of employees eligible for overtime pay under the FLSA continued, with the agency issuing an “Administrator’s Interpretation” (the Memo) concerning which workers may lawfully be classified as independent contractors instead of employees. The Memo is ostensibly meant to provide “guidance” for employers on the standards federal courts use to assess proper independent contractor classifications, although it reads more like a plaintiff-side summary judgment brief than any neutral presentation of actual federal case law.
Per the Memo, an employer must classify a worker as an employee if (s)he is “economically dependent” on the employer. Only if the worker is not economically dependent on the employer, but is, instead, “in business for him or herself,” may the employer classify the worker as an independent contractor. The Memo identifies six factors that employers should consider when making this determination, including: whether the work performed is an integral part of the employer’s business; whether the worker’s managerial skill affects his/her opportunity for profit or loss; whether the work performed requires special skill and initiative; and the extent to which the employer controls the manner in which the work is performed. Interestingly, the Memo de-emphasizes the “control” factor – i.e., whether the worker is subject to direct supervision and can set his/her own schedule. The DOL warns that employers should not give this factor “undue weight” when deciding how to classify a worker.
Although there is no certainty regarding the level of deference courts will afford the Memo (if any), employers would be wise to give it serious attention, as it makes plain that the DOL is eager to prosecute and punish employers that have misclassified any of their independent contractors.
Click here for our prior post containing more extensive coverage and analysis.
- N.Y. Federal Court Makes Landmark Ruling on the Rights of Unpaid Interns
On July 2, the U.S. Court of Appeals for the Second Circuit issued a new test for determining whether interns must be treated and paid like regular employees. Rejecting the “rigid” test previously laid out by the DOL, the Second Circuit ruled that the answer hinges on whether the employer or the intern is the “primary beneficiary” of their relationship. Under this malleable standard, an employment relationship is created when the benefits provided to the intern are greater than the intern’s contribution to the employer’s operations.
The court also held that, under its newly announced “primary beneficiary” test, “the question of an intern’s employment status is a highly individualized inquiry,” casting doubt on whether wage and hour claims by interns will ever be appropriate for class or collective action treatment.
It remains to be seen whether the DOL or its New York state counterpart will issue new guidance to align with that of the Second Circuit. For its own part, the New York Department of Labor previously enumerated 11 factors to determine an intern’s employment status.
Click here for our prior post containing more extensive coverage and analysis.
- N.Y. State Fast Food Workers Likely To Win $15-Minimum Wage Raise
On July 22, a three-person wage board (the Board) convened by New York Governor Andrew Cuomo revealed formal proposals to remedy perceived wage inequality in the state’s fast food industry. As many in the business community had feared, the Board proposed increasing the minimum wage rate for “fast food employees” to $15/hour – an increase to be phased in over three years for workers in New York City, and over five-and-a-half years throughout the rest of the state.
Despite unanimous praise for the Board’s proposals by worker advocates, the business community is expected to challenge the legality of the proposals before implementation.
Click here for our prior post containing more extensive coverage and analysis.
What’s the Takeaway for My Company?
The wage and hour landscape is as lively as ever. Employers nationwide should brace for a slew of changes in the next year – if not in the next few months – that could dramatically impact their operations and workplace policies. It is more important than ever for employers to stay in regular contact with experienced counsel to discuss these issues, and to prepare a cogent plan for facing head-on the constantly changing legal standards in this area.
Trend Alert: NLRB Holds Employee Acting Alone Engages in Concerted Activity
8/5/2015
By Susan Baker
The NLRB, and courts interpreting the National Labor Relations Act (“NLRA”), consistently have held that to engage in concerted activity protected by Section 7, two or more employees must take action for their mutual aid or protection regarding terms and conditions of employment. Key takeaways: “two or more” and “mutual.” But, as the title of this article suggests, even a lone wolf may fall within this definition in certain circumstances.
On July 29, 2015, the NLRB generously expanded the definition of “concerted” when it held a single employee, acting alone and without the consent of his peers, engaged in protected activity. In the suit, 200 East 81st Restaurant Corp., discharged waiter, Marjan Arsovski, claimed his former restaurant employer engaged in wage and hour violations under to the Fair Labor Standards Act (“FLSA”). The suit was filed as a collective action, which differs from a class action in that class members are not automatically presumed to be included in the class; rather, members must affirmatively “opt in” to the action. Here, Arsovski was the only named plaintiff and there was no credible evidence to suggest he planned or discussed the filing of the complaint with other employees or that other employees were interested in “opting in.” Despite this, and despite the fact that the NLRB has no jurisdiction over FLSA claims, the Board held that in filing the complaint, Arsovski was seeking to initiate or induce group action and, therefore, engaged in protected concerted activity.
The Board’s opinion suggests that any collective or class action could implicate Section 7 protection. Employers need to be very aware of this potentially significant trend: employers must now consider potential liability under the NLRA even in circumstances where the NLRB has no jurisdiction over the claim at issue and even when a single employee is involved. Hinshaw will be tracking this issue closely to see how the Board continues to develop this area of the law.
Summary of NLRB Decisions for Week of July 27 – 31, 2015
The Summary of NLRB Decisions is provided for informational purposes only and is not intended to substitute for the opinions of the NLRB. Inquiries should be directed to the Office of Public Affairs at Publicinfo@nlrb.gov (link sends e-mail) or 202‑273‑1991.
Summarized Board Decisions
Constellation Brands, U.S. Operations, Inc. d/b/a Woodbridge Winery (32-CA-148431; 362 NLRB No. 151) Acampo, CA, July 29, 2015.
The Board granted the General Counsel’s motion for summary judgment in this refusal-to-bargain test-of-certification case on the ground that the Respondent did not raise any issues that were not, or could not have been, litigated in the underlying representation case in which the Charging Party Union was certified as the exclusive collective-bargaining representative of the unit employees. Accordingly, the Board found that the Respondent violated Section 8(a)(5) and (1) of the Act by failing and refusing to recognize and bargain with the Union since March 25, 2015. Charge filed by Cannery, Warehousemen, Food Processors, Drivers and Helpers, Local Union No. 601, International Brotherhood of Teamsters. Chairman Pearce and Members Hirozawa and McFerran participated.
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200 East 81st Restaurant Corp. d/b/a Beyoglu (02-CA-115871; 362 NLRB No. 152) New York, NY, July 29, 2015.
A Board Panel majority consisting of Chairman Pearce and Member McFerran affirmed the Administrative Law Judge’s finding that the Respondent violated Section 8(a)(1) of the Act by discharging an employee because the employee filed a class action lawsuit in federal district court alleging certain violations of the Fair Labor Standards Act. The majority, based on the views expressed in D. R. Horton, 357 NLRB No. 184 (2012), enf. denied in part 737 F.3d 344 (5th Cir. 2013), and in the majority opinion in Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), found that an individual employee filing an employment-related class or collective action is seeking to initiate or induce group action and therefore is engaged in concerted activity protected by Section 7 of the Act. Member Miscimarra, dissenting, would find that the employee’s individual act of filing a FLSA lawsuit was not concerted activity. Because of his view that filing the lawsuit was not concerted activity and there is no evidence that the Respondent believed the employee engaged in any other concerted activity, Member Miscimarra would find that the employee’s discharge was not unlawful.
Administrative Law Judge Raymond P. Green issued his decision on April 29, 2014. Charges filed by an individual. Chairman Pearce and Members Miscimarra and McFerran participated.
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Leon James, DDS d/b/a Serenity Dental Spa, P.A. (16-CA-123727 and 16-CA-127480; 362 NLRB No. 116) Arlington and Duncanville, TX, July 29, 2015.
The Board issued a correction to the June 12, 2015 Decision and Order. Errata Amended Decision.
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Keller Construction, Inc. (14-CA-122352 and 14-CB-116188; 362 NLRB No. 153) Glen Carbon, IL, July 30, 2015.
The Board adopted the Administrative Law Judge’s finding that Respondent Laborers International Union of North America, Local 397 violated Section 8(b)(1)(A) and (2) of the Act by requesting that Respondent Keller Construction, Inc. lay off the charging party, and that Keller Construction violated Section 8(a)(3) and (1) by acquiescing in Local 397’s request. In adopting the judge’s dismissal of an allegation that Local 397 violated Section 8(b)(2) by failing to assist GRP Mechanical in hiring the charging party for work located outside of Local 397’s jurisdiction, the Board relied on the absence of evidence that Local 397 directly prevented GRP Mechanical from hiring him, prevented the Company from following proper procedure by contacting the local with jurisdiction over the work, or said anything that could reasonably be understood by the Company as a request to refrain from hiring the charging party through proper channels. Contrary to the judge, the Board further found that Local 397’s failure to assist GRP Mechanical did not violate Section 8(b)(1)(A). In reversing the judge, the Board found insufficient evidence to support the inference on which the judge relied in finding the violation.
Charges filed by an individual. Administrative Law Judge Arthur J. Amchan issued his decision on June 10, 2014. Chairman Pearce and Member Johnson and McFerran participated.
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Columbia Memorial Hospital (03-CA-120636, et al.; 362 NLRB No. 154) Hudson, NY, July 30, 2015.
The Board affirmed the Administrative Law Judge’s finding that the Respondent violated Section 8(a)(3) and (1) by disciplining an employee with a verbal warning and a five-day suspension for allowing a Union representative access to the facility and alleged dishonesty during the subsequent investigation. The Board found that the General Counsel met his initial Wright Line burden, relying on evidence, in addition to timing, to find animus, and that the Respondent failed to demonstrate that it would have taken the same actions regardless of the employee’s union activity. Charge filed by 1199 SEIU United Healthcare Workers East. Administrative Law Judge Kenneth W. Chu issued his decision on January 12, 2015. Members Hirozawa, Johnson, and McFerran participated.
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Unpublished Board Decisions in Representation and Unfair Labor Practice Cases
R Cases
Pro Labor II, Inc./ACECO, LLC (05-RC-149858) Alexandria, VA, July 27, 2015. Order denying the Petitioner’s and ACECO’s requests for review of the Regional Director’s Decision and Direction of Election. Petitioner—Construction and Master Laborers’ Local Union No. 11, affiliated with Laborers’ International Union of North America. Chairman Pearce and Members Hirozawa and McFerran participated.
Sabreliner Aviation, LLC (14-RD-135815) St. Genevieve, MO, July 27, 2015. Board Order granting the Union’s amended request to file an opposition statement out of time.
Pacific Gas & Electric Co. (20-RC-140248) San Ramon, CA, July 29, 2015. The Board adopted the Regional Director’s findings and recommendations that Petitioner’s Objections 2, 3, 12, and 13 be overruled in their entirety. The Board remanded the case to the Regional Director for further appropriate action, as the Regional Director had set other Petitioner Objections for a hearing. Petitioner—Engineers and Scientists of California, Local 20, IFPTE, AFL-CIO & CLC. Chairman Pearce and Members Miscimarra and Hirozawa participated.
Oceanic Time Warner Cable, LLC (20-RC-145340) Kailua-Kona, HI, July 31, 2015. The Board adopted the hearing officer’s recommendation to sustain the challenge to the ballot of the Employer’s dispatcher. Applying the standard set forth in Caesar’s Tahoe, 337 NLRB 1096 (2002), the Board found that the extrinsic evidence revealed the parties intended to not include the dispatcher in the stipulated unit. There were no exceptions to the hearing officer’s recommendation to sustain the challenge to the Employer’s OSP Engineer II. Accordingly, the Board certified the Petitioner, International Brotherhood of Electrical Workers, Local 1186, as the exclusive collective-bargaining representative of the employees in the appropriate unit. Chairman Pearce and Members Miscimarra and Hirozawa participated.
C Cases
New York Party Shuttle, LLC (02-CA-073340) New York, NY, July 28, 2015. Order denying the Employer’s petition to revoke an investigative subpoena, based on the Employer’s lack of standing concerning a petition addressed to a third party, as well as on the merits. Member Miscimarra, agreeing that the Employer had not established a sufficient basis for revoking the subpoena, did not reach the issue of standing. Charge filed by an individual. Chairman Pearce and Members Miscimarra and McFerran participated.
The Imperial Sales, Inc. (29-CA-147909) Syosset, NY, July 28, 2015. Order denying a third party’s petition to revoke an investigative subpoena duces tecum. The Board found that the subpoena sought information relevant to the matter under investigation and described with sufficient particularity the evidence sought. Further, the Board held that the third party failed to establish any other legal basis for revoking the subpoena. Chairman Pearce and Members Hirozawa and McFerran participated.
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Appellate Court Decisions
No Appellate Court Decisions involving Board Decisions to report.
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Administrative Law Judge Decisions
Kitsap Tenant Support Services, Inc. (19-CA-108144, et al.; JD(SF)-29-15) Bremerton, WA. Administrative Law Judge Ariel L. Sotolongo issued her decision on July 28, 2015. Charges filed by Washington Federation of State Employees, American Federation of State, County and Municipal Employees, Council 28, AFL-CIO.
New York City District Council of Carpenters Apprenticeship, Journeyman Retraining, Educational, and Industry Fund (02-CA-121358 and 02-CA-121477; JD(NY)-36-15) New York, NY. Administrative Law Judge Lauren Esposito issued her decision on July 30, 2015. Charges filed by individuals.
United States Postal Service (28-CA-128635; JD(SF)-27-15) Tucson, AZ. Administrative Law Judge John J. McCarrick issued his decision on July 30, 2015. Charge filed by National Association of Letter Carriers, Carl J. Kennedy, Branch 704, affiliated with National Association of Letter Carriers, AFL-CIO.
Apogee Retail, NY, LLC d/b/a Unique Thrift Store (02-CA-133989, et al.; JD(NY)-31-15) Bronx, NY. Administrative Law Judge Raymond P. Green issued his decision on July 30, 2015. Charges filed by Local 338, RWDSU/UFCW.
UPMC and its subsidiary, UPMC Presbyterian Shadyside, single employer, d/b/a UPMC Presbyterian Hospital and d/b/a UPMC Shadyside Hospital (06-CA-102465, et al.; JD-43-15) Pittsburgh, PA. Administrative Law Judge Mark Carissimi issued his supplemental decision on July 31, 2015. Charges filed by SEIU Healthcare Pennsylvania CTW, CLC.