Human Resource and Labor Relations professionals (HR/LR) normally take the lead on workplace investigations of employee misconduct. Given that, they may also bear the blame for investigations that result in adverse employment actions that do not withstand litigation scrutiny. If a current or former employee challenges an adverse employment action via an EEOC or NLRB charge, a DOL complaint, a CBA grievance, or court action, the employer incurs significant expense and disruption simply defending the action. The employer’s exposure increases exponentially if the employer loses the case on the merits before a regulator or court. Consequently, HR/LR should devote sufficient time and attention to workplace investigations to avoid challenge in the first place, where possible, and to ensure the best chance of winning on the merits if a challenge does take place. But where to look for guidance? This blog answers that question and provides a checklist for HR/LR to follow to conduct employee misconduct investigations that will withstand litigation scrutiny.
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.
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 The Obama administration had eliminated the practice and withdrawn many existing opinion letters, including many of those reissued this month.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.
The Sixth Circuit yesterday outlined narrow circumstances under which an employer can show good faith reliance on a Department of Labor opinion letter in setting wage-hour policy. In Perry v. Randstad General Partner, No. 16-1010 (6th Cir. Nov. 20, 2017), the Court held the employer did not establish a good faith reliance defense despite undisputed evidence that the employer relied on a 2005 DOL opinion letter in determining that its employees met the administrative exemption of the FLSA. The opinion serves as a note of caution to employers relying on DOL opinion letters for wage-hour policies.
On September 21, 2017, a federal district judge rejected a $19.1 Million proposed deal to end a nationwide wage-hour class action against the TGI Friday’s restaurant chain. In Zorrilla v. Carlson Restaurants Inc., 14-cv-2740 (SDNY), a class of nearly 29,000 tipped workers in nine states alleged violations of the FLSA and state wage-hour laws, including that the restaurant improperly took a tip credit, required an unlawful tip pool, and failed to pay spread-of-hours and uniform-related expenses. After more than four years of litigation, the parties reached perhaps the largest wage-hour settlement for the restaurant industry and sought court approval as required under the FLSA.
On August 31, a Texas federal court struck down the Obama-era Department of Labor rule that significantly increased the salary threshold for the white collar exemptions to overtime pay. The court temporarily enjoined the rule in November 2016, and this latest ruling makes that decision final (save for an unlikely appeal).
The court ruled that the DOL “does not have the authority to use a salary-level test that will effectively eliminate the duties test” set forth in the Fair Labor Standards Act.
Notably, new Secretary of Labor Alexander Acosta issued a request for information on the DOL’s overtime rules in late July. The request solicited several comments on whether the DOL should update the current $23,660 salary threshold. So while the Texas court’s ruling gives employers some temporary certainty on overtime exemptions, it remains to be seen what the Trump Administration’s DOL will do.
House Republicans recently introduced H.R. 3441, a bill that aims to clarify and narrow the definition of “joint employer” under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).
The bill proposes the following uniform definition: