Articles Posted in Wage Violations

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Owen Laird, Esq.

Today is Opening Day for the 2018 Major League Baseball season. Spring training is over, and while the Major Leaguers head back to their stadiums, the Minor League players who didn’t make the cut are headed back to work as well. Those Minor Leaguers might be a little worse off this year because of the sweeping $1.3 trillion budget bill that President Trump signed last week. One of the more nuanced aspects of the bill is an amendment to the Fair Labor Standards Act (“FLSA”) known as the “Save America’s Pastime Act.” This amendment aims to “save” baseball by suppressing the wages that minor league teams pay to their players.

While major league baseball players enjoy a minimum annual salary—which amounts to hundreds of thousands of dollars per year, with top players earning tens of millions of dollars a year—minor league baseball players are a different story. Not only do minor league players significantly outnumber major league players, but, unlike major league players, minor leaguers are not unionized. As a result, baseball’s minor leagues are populated with thousands of players, many of whom are barely squeaking by.

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On February 15, 2018, Judge William Alsup of the U.S. District Court for the Northern District of California granted class certification in Dulberg v. Uber Technologies, Inc., a suit filed in February 2017 alleging that Uber’s pricing and payment model deprives drivers of fair pay for their work. This decision will allow as many as 9,197 Uber drivers from across the United States to pursue their claims as a class.

Uber is among the most successful of a number of rapidly growing companies that are part of the so-called “gig economy.” The U.S. Department of Labor defines a “gig” as a “single project or task for which a worker is hired, often through a digital marketplace, to work on demand.” Gig economy and freelance workers, such as Uber drivers, are becoming an increasingly visible and important component of the U.S. workforce; an estimated nearly four million freelancers work in the New York City area alone. Yet while gig economy workers may enjoy certain benefits—such as scheduling flexibility—they are also often at a disadvantage in comparison to traditional employees. Gig economy workers are almost invariably classified as independent contractors and are thereby cut off from most of the legal protections afforded to employees, including minimum wage and overtime laws, as well as employment benefits like health insurance—and many freelancers report difficulty getting paid for their work on time or at all.

Uber’s treatment of its gig economy workers has gained particular attention over the past several years, as drivers have brought a number of lawsuits against the company and have protested many of Uber’s internal policies, such as its recently revoked harsh termination policy, under which any driver with three complaints would be automatically terminated without investigation. Recently, a U.K. court issued a landmark decision, finding that Uber’s London drivers were employees, not independent contractors, and we have previously reported on several lawsuits brought by Uber drivers concerning whether drivers’ on-call time is compensable, drivers’ arbitration agreements with Uber, and class actions challenging Uber’s classification of drivers as independent contractors.

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By Owen H. Laird, Esq., and Edgar M. Rivera, Esq.

Recognizing the unequal bargaining power between employees and employers, employment laws such as the Fair Labor Standards Act (FLSA) create rights and protections for employees. And, while identifying whether a worker is an employee or not may seem relatively straightforward at first glance, the question can, in reality, be surprisingly complicated. Between traditional employees, independent contractors, and paid and unpaid interns, modern workplaces include a variety of different types of workers, only some of whom are entitled to the rights and protections created by laws like the FLSA.

A recent decision by the U.S. Department of Labor (DOL) changed the standard by which the DOL determines whether interns qualify as employees under the FLSA for the purposes of minimum wage and overtime rights. In 2010, the DOL adopted a six-factor conjunctive test for interns, whereby a legitimate internship relationship would exist only if all six factors were met. Those factors were:

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Last week, on September 13, 2017, the U.S. District Court for the Eastern District of Pennsylvania denied Uber’s motion for partial summary judgment in Razak v. Uber Technologies, Inc. This decision allows a putative class of Philadelphia-based Uber drivers to move forward with claims against Uber for failing to compensate them for “on-call” time they spent logged into the Uber app, but not driving customers.

The Fair Labor Standards Act (FLSA) requires employers to compensate employees for all hours worked, including on-call time: hours worked where “the employee is required to remain on the employer’s premises, or […] although not required to remain on the employer’s premises, finds his time on call away from the employer’s premises is so restricted that it interferes with personal pursuits.” The recent rise of gig economy work— individual projects and tasks picked up at a worker’s discretion, often using apps like Uber and TaskRabbit—has presented a challenge to the existing model of on-call time, as courts are asked to consider what constitutes compensable on-call time for workers who may never report to a central place of employment or who are, at least to some degree, able to work whenever they choose.

In Razak, a group of Uber drivers alleged that their time spent logged into the Uber driver app and waiting for ride requests, but not actually driving customers, qualified as on-call time under the FLSA and that Uber’s failure to compensate them for such time had led to minimum wage and overtime violations. Uber moved to dismiss the drivers’ complaint; the court denied Uber’s motion to dismiss and ordered expedited discovery on the issue of whether the drivers’ time spent online qualified as compensable on-call time under the FLSA. After the parties completed expedited discovery, Uber moved for partial summary judgment. The court denied this motion as well, determining that it could not find that this on-call time was not compensable under the FLSA.

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On March 13, 2017, the U.S. Court of Appeals for the First Circuit reversed the district court’s granting of summary judgment in O’Connor v. Oakhurst Dairy, an unpaid overtime case brought by delivery drivers for Oakhurst Dairy (“Oakhurst”), a Maine local milk and cream company. The First Circuit found that the district court had incorrectly categorized the drivers as exempt from overtime under an ambiguous section of the Maine state wage-and-hour law—all, as First Circuit Judge David J. Barron wrote in the O’Connor opinion, “[f]or want of a comma.”

The O’Connor plaintiffs filed suit in the United States District Court for the District of Maine in May 2014, seeking unpaid overtime wages under the Fair Labor Standards Act (“FLSA”) and the overtime provisions of the Maine state wage-and-hour statute, 26 M.R.S.A. § 664(3). They alleged that Oakhurst had misclassified them as exempt under Exemption F of the Maine state overtime law, which states that employees engaged in “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of […] [p]erishable foods” do not receive overtime protections.

The dispute turned on the phrase “packing for shipment or distribution,” and, specifically, the lack of a comma after the word “shipment.” The drivers argued that the phrase refers to one job duty: “the single activity of ‘packing,’ whether the ‘packing’ is for ‘shipment’ or for ‘distribution.’” Since the drivers handled perishable foods, but did not engage in packing them, they alleged that they had been improperly classified as exempt under Exemption F. Oakhurst counter-argued that the provision describes two distinct activities: (1) “packing for shipment,” and (2) “distribution.” Under this reading of Exemption F, the dairy delivery drivers could be properly classified as exempt, as they did engage in the distribution of perishable foods. Both parties moved for partial summary judgment, which the district court granted in favor of Oakhurst. Plaintiffs appealed, and the First Circuit reversed the district court’s decision.

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Harrison Paige

The U.S. District Court of Colorado recently certified a class action lawsuit filed against GEO Group, Inc. (“GEO”), a billion-dollar private prison conglomerate. Plaintiffs claim that they were forced to clean the Aurora Detention Facility (the “Facility”) while detained and awaiting immigration hearings, in violation of federal slave labor laws, and that GEO was unjustly enriched by Plaintiffs’ work. This is the first time that a court has certified a class action claiming that a private U.S. prison violated the Trafficking Victims Protection Act (“TVPA”). The TVPA’s prohibitions against forced labor state that obtaining labor or services via means or threats of force, restraint, harm, abuse, threatened abuse of law, or deceptive schemes is illegal. The approval of class action status means that up to 60,000 current and former inmates of the Facility “are now part of the lawsuit without having to actively join as plaintiffs.

First, Plaintiffs claim that GEO violated the TVPA “by requiring detainees to clean the private and common areas of the Facility without any compensation and under the threat of solitary confinement and other punishments.” Allegedly, GEO chooses a handful of inmates each day and forces them to work as janitorial staff for the 1,500-bed Facility, violating Immigration and Customs Enforcement’s (“ICE”) own sanitation policy, which only mandates that “all detainees perform personal housekeeping,” like making their own beds, organizing their bunk area, and keeping the floor free of clutter. The sanitation policy does not include any mandate regarding detainees working as janitorial staff for the entire Facility. Thus, Plaintiffs claim that Facility staff’s threats of solitary confinement and additional criminal charges to solicit detainee labor violates the forced labor provision of the TVPA (18 U.S.C. §§ 1589, 1595).

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Shelby Krzastek

On November 23, 2016, a jury returned a verdict for the plaintiffs in Ridgeway v. Wal-Mart Stores, Inc., finding that the retail giant Wal-Mart owed approximately 850 former Wal-Mart truck drivers back pay for hours worked for which they had not been compensated. These hours included time spent on pre- and post-trip inspections, 10-minute rest breaks, and mandatory 10-hour layovers. The jury awarded the drivers $55 million, with the bulk of the award earmarked for Wal-Mart’s failure to pay drivers the minimum wage for the aforementioned mandatory layovers.

The Ridgeway decision came out of the Northern District of California, where the case was approved for class certification and ultimately tried. Plaintiffs claimed that Wal-Mart failed to pay its truck drivers the minimum wage and failed to pay them for all work done. The drivers alleged that Wal-Mart’s compensation scheme, which paid drivers based on activities performed rather than hours worked, meant that drivers were not paid the minimum wage for all hours worked. The payment structure calculated wages for drivers based on mileage, activity pay, and non-activity pay; “activity pay” refers to pay for regular compensable job duties, and “non-activity pay” to pay for events at Wal-Mart dispatch and home offices, as well as unplanned events.

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Edgar M. Rivera, Esq.

In Smiley v. E.I. DuPont de Nemours & Co., the Court of Appeals for the Third Circuit held that employers could not offset compensation given to their employees for bona fide meal breaks against required overtime.

Plaintiffs filed a putative collective action and class action against DuPont—the world’s fourth largest chemical company—seeking overtime compensation for time they spent donning and doffing their uniforms and protective gear and performing “shift relief” before and after their regularly scheduled shifts. DuPont contended that it could offset compensation it gave plaintiffs for meal breaks during their shift—for which DuPont was not required to provide compensation under the FLSA—against such required overtime. Under the FLSA, an employer must pay its employees for time worked, which does not include bona fide meal breaks.

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Yarelyn Mena and Edgar M. Rivera, Esq.

In a 2014 case, Martin v. The United States, the United States Court of Federal Claims held that an employer’s late payment of wages violates the Fair Labor Standards Act (“FLSA”) and may trigger liquidated ”double payment” damages. The case arose out of the 2013 government shutdown (October 1, 2013 to October 16, 2013) which resulted in the untimely payment of wages to government workers.

Towards the end of 2013, Congress failed to issue funds for government workers, forcing the federal government into a partial shutdown. The shutdown took place in the first two weeks of October 2013, in the middle of a pay period, which resulted in plaintiffs unpaid government employees being paid only for work from September 22 to September 30, and not the first five days in October. Two weeks after their scheduled payday the plaintiffs received pay for those five days. They argued that the federal government’s failure to pay them for hours worked resulted in (i) underpayment that constituted a minimum wage violation, (ii) failure to pay non-exempt employees for overtime hours worked, and (iii) failure to pay even exempt employees for overtime hours worked.

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Lucie Riviere

On July 8, 2015, in a post titled “Second Circuit Articulates New Test to Determine Whether Employers Need to Pay Their Interns,” The Harman Firm, LLP reported on the Second Circuit’s July 2, 2015 decision in Glatt v. Fox Searchlight Pictures, Inc., which established a new test to determine whether employers must pay their interns. On January 25, 2016, the Second Circuit amended that decision upon Plaintiffs’ petition for rehearing en banc. This new decision includes few but significant changes.

From September 2009 to August 2010, Plaintiffs Eric Glatt, Alexander Footman, and Eden Antalik worked for Defendants Fox Searchlight and Fox Entertainment Group, Inc. as unpaid interns. They bring claims against Defendants for failing to comply with the Fair Labor Standards Act and New York Labor Law by refusing to pay them the minimum wage and overtime pay. On February 15, 2013, Plaintiffs moved for summary judgment and class certification, among other things. On June 11, 2013, the district court rejected the “primary beneficiary” test, which focuses on what the intern receives in exchange for his work as compared with the benefit received by the employer, and instead followed the Department of Labor’s approach to determine whether unpaid interns in the for-profit private sector need to be compensated, granting Plaintiffs’ motion in part. Defendants appealed on the basis that the district court should have applied the “primary beneficiary” test. The Second Circuit agreed and vacated the district court’s decision, holding that the analysis of whether an intern is an employee and, therefore, covered by the FSLA, turns on “whether the intern or the employer is the primary beneficiary of the relationship.” To aid the analysis, the Second Circuit provided a list of “non-exhaustive factors.”

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