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Earlier this month, the Department of Labor issued an opinion letter ending the “80/20 rule” for whether employers could take a tip credit on employees who performed both tipped and non-tipped work. (FLSA2018-27.) The rule prohibited employers from taking a tip credit on the minimum wage if the employee’s non-tipped work consumed more than 20 percent of the employee’s work. In the opinion letter, the DOL stated that it would not “place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the [Fair Labor Standards] Act are met.”

Continue Reading DOL Eliminates 80/20 Rule for Tipped Workers

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On September 25, 2018, the Ninth Circuit granted Uber’s motion to compel arbitration and decertified a class of 160,000 drivers alleging violations of California state law, including misclassification of the drivers as independent contractors. The decision does not come as a great surprise given the court’s 2016 ruling compelling arbitration in a related case, but it serves as a reminder to companies everywhere to re-examine their independent contractor agreements.

Continue Reading Ninth Circuit Decertifies Class of 160,000 Alleging Misclassification as Independent Contractors

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On August 28, 2018, the U.S. Department of Labor’s Wage Hour Division issued six new advisory opinion letters offering employers guidance on a range of leave and wage issues under federal law, including the application of the Family Medical Leave Act to organ donors and a no-fault attendance policy.

Continue Reading DOL Guidance on FMLA, No-Fault Attendance Policy, and Wellness Screenings

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Today, the United States Supreme Court ruled in Epic Systems Corp. v. Lewis, No. 16-285 that employers could lawfully require employees to waive their rights to pursue employment-related class actions through arbitration agreements providing for individualized proceedings. In a 5-4 decision, the Court ruled that such waivers do not violate the National Labor Relations Act.

Continue Reading Of Elephants and Mouseholes: Supreme Court Holds Employers Can Lawfully Require Class Action Waivers in Arbitration Agreements

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On April 30, 2018, the California Supreme Court substantially narrowed the class of individuals who qualify as independent contractors under California wage-hour law and paved the way for a new wave of class actions. In Dynamex Operations West, Inc., the Court adopted the restrictive “ABC test” used in other jurisdictions for determining when a worker qualifies as an independent contractor under California’s Industrial Wage Orders.

Under that test, the court presumes‌ all workers qualify as employees. A hiring entity can prove that the worker qualifies as an independent contractor only if it can show that the worker:

A) is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

B) performs work that is outside the usual course of the hiring entity’s business; and

C) is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Continue Reading California Narrows Definition of Independent Contractor; Upends 30-Year Old Test

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On Monday, April 2, 2018, the Supreme Court of the United States ruled that car dealerships do not have to pay service advisors overtime under federal law. In a 5-4 decision, the Supreme Court held that service advisors, like auto salespersons, partspersons, and mechanics, are exempt from the Fair Labor Standards Act’s overtime requirements.

Continue Reading Supreme Court Rules Car Dealerships Don’t Have To Pay Overtime To Service Advisors

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On March 5, 2018, the California Supreme Court changed the test for factoring flat sum bonuses into the overtime rate in Alvarado v. Dart Container Corporation of California, ordering a calculation that will increase the costs of overtime for employers who pay such bonuses.  Under the federal formula, an employer must divide an employee’s total weekly pay (including non-discretionary bonuses) by the total number of hours the employee worked in a week to get the regular rate; the employer then must pay time-and-a-half that rate for all overtime hours. But under the Alvarado court’s formula, the employer must divide the total weekly pay by only “the number of nonovertime hours the employee [actually] worked during the pay period.” That smaller divisor will lead to higher overtime rates.

Continue Reading California Supreme Court Rejects Federal OT Formula; Requires More Expensive Calculation

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Earlier this month, the Wage and Hour Division of the Department of Labor reissued 17 opinion letters from the Bush administration.  The letters provide employers important guidance on a wide-range of issues under the Fair Labor Standards Act.

The reinstatement marks the first publication of opinion letters since the DOL announced last June that it would bring back that form of guidance.  The Obama administration had eliminated the practice and withdrawn many existing opinion letters, including many of those reissued this month.

The reinstated letters do not upend any existing laws, but they provide important guidance and a possible safety net to employers facing similar situations. Many of the reinstated letters concerned application of Section 13(a)(1)’s overtime exemption for executive and administrative employees.  The letters also discussed whether certain bonuses must be included in the regular rate for purposes of calculating overtime and whether certain on-call time qualified as compensable working hours.

The letters contain a cover letter noting that someone had specifically asked the DOL to reissue that particular opinion letter.  Thus, employers who would like to rely on previously withdrawn opinion letters should consider asking the DOL to reissue them under its new policy.

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The California Court of Appeals held late last week that a plaintiff does not have standing to pursue California Private Attorneys General Act (PAGA) claims on behalf of the state or other employees once he accepts an offer to settle his individual claims.  The court in Kim v. Reins International California, Inc. B278642 (Dec. 29, 2017), held that once the plaintiff accepted the settlement offer, he no longer qualified as an “aggrieved employee” within the meaning of the statute.  The case expands the potential impact of offers of judgment in California wage-hour class actions.

Continue Reading Cal. Court: No Standing to Continue PAGA Claim After Settlement

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In a series of recent decisions, courts have weighed in on a spate of ERISA lawsuits challenging retirement plans private universities offer to their employees.  These rulings, most of which allowed claims to proceed past the motion to dismiss stage, highlight the variation in standards courts apply when weighing ERISA fiduciary suits.  Moreover, they underline the need for plan fiduciaries to review the performance and fees of their plans’ service and investment providers on a regular basis to determine whether the providers’ fees are reasonable and their continued retention is appropriate.

Continue Reading Courts Weigh in on Challenges to University Retirement Plans