Recent Court and Fed Actions Promise New Interpretations of Wage and Hour Rules to Come - American Society of Employers - Anonym

Recent Court and Fed Actions Promise New Interpretations of Wage and Hour Rules to Come

Last week the U.S. Supreme Court heard arguments on another case that, together with one it ruled on earlier this year, could further change the way non-exempt workers are compensated for time before and after their actual work times. Not to be upstaged by the Supreme Court, the White House itself has directed the Department of Labor to reinterpret (again) the definitions of exempt/non-exempt employment. If nothing else, these developments will give HR professionals and labor attorneys plenty of new rules to keep up on.

Earlier this year the U.S. Supreme Court ruled that donning and doffing protective gear, because the gear was “both designed and used to cover the body,” (as distinct from equipment like helmets, safety glasses or ear plugs, which are safety equipment) was considered the same as “changing clothes” under section 203 (o) of the FLSA, and therefore non-compensable time. The case was Sandifer et al. v. United States Steel Corp.

Last week the Supreme Court heard arguments on another Wage and Hour case, Integrity Staffing Solutions v. Busk. In this case, contract warehouse workers for Amazon argued that the time they spent going through mandatory security checks at the end of their shifts—reportedly up to 25 minutes or longer—should be compensable. The employer, invoking the Portal to Portal Act of 1947, argued that the time is only checkout time and therefore non-compensable. Under existing wage and hour law, time spent performing tasks that are integral and indispensable, or beneficial to the employer, are compensable.

Interestingly, the judges took notice of, and reference to, a case from long ago in their own world. It was the case of a judge who had his clerks come in early to prepare his breakfast before sessions. The issue of whether those duties were preliminary or postliminary to the job, and therefore non-compensable, became part of the current discussion. Arguing for the government in the present case, the Assistant to the Solicitor General asserted that no, those duties would not be compensable because they were postliminary or preliminary. Also interesting is the fact that the government in this case is siding with the employer. Observers suspect that is because the government itself has large numbers of employees suing it over wages for performing similar unpaid tasks. They see irony in the government’s stance, in the light of its very public and muscular support for raising the minimum wage and extending overtime rights to a broader swath of the workforce (see below).

Further arguments revolved around the lengthy amounts of time required to go through the security checks and whether the requirement itself was a “principal activity” of the job. Business losses due to employee theft each year are in the billions of dollars; therefore security systems that include checking employees as they come and go are nothing new. To date, they have not been considered work time. It was pointed out that the reason for the lengthy amounts of time required was inadequate staffing of security personnel. Nevertheless, Plaintiff’s attorney argued that the fact that the employer directed and required the process was sufficient to consider the activity time worked. Commentators on the oral arguments saw a split among the judges.

Another case the Supreme Court will rule on this term is an appeal of Mortgage Bankers Association v. Harris, 720 F.3d 966 (D.C. Cir. 2013), a decision that came out of the the D.C. Appeals Court. Depending on its decision, the Supreme Court could restrain administrative agencies like the Department of Labor from flip-flopping their interpretations of regulations from one White House administration to the next.

Concurrently, and not coincidentally, President Obama has directed the Department of Labor to review the definition of exempt classifications under Wage and Hour. The President’s memorandum states three considerations to the DOL:

  • Update existing protections in keeping with the intention of the Fair Labor Standards Act.
  • Address the changing nature of the American workplace.
  • Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.

New regulations would change some basics of wage and hour regulations as they pertain to the classification of exempt employees. The DOL blog explains the government’s position and intentions in revising the rules:

". . . (the) exceptions were originally designed to only apply to well-compensated employees with greater job security, more bargaining power, and higher potential for promotion. So as long as these professionals earned above a certain salary threshold, they were not entitled to overtime. Unfortunately, that salary threshold has only been updated twice in the last 40 years, so the exception is capturing employees who just don’t make that much."

These proposed regulations are anticipated to be out in the first quarter of 2015. ASE will be ready with a  Hot Button Briefing program when the regulations come out.

Sources: Proskauer RoseLaw.com Supreme Court Briefs; U.S. Department of Labor; The New York Times 10/3/14

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