FLSA and Mootness: The Court Punts and Kagan Throws a Stiff Arm

By Glenn Rissman on April 18, 2013 Posted in Employment Litigation, Wage & Hour/Employee Classification

We have blogged in the past whether offering back pay and other expenses to a plaintiff in a lawsuit under the Fair Labor Standards Act (FLSA) can “kill” the lawsuit. Some courts have recognized that offering the plaintiff full back pay and expenses makes the lawsuit “moot,” even if the plaintiff rejects the offer. Other courts have refused to dismiss an FLSA case after the plaintiff accepted the offered back pay, fees and expenses. Enter the U.S. Supreme Court and the case of Genesis Healthcare Corp. v. Symczyk. We thought we would get our answer to whether offering back pay, expenses, and fees would be a foolproof way to get an FLSA case tossed. Well, not really.

To set the stage, a brief discussion of the facts is necessary. Symczyk sued her former employer under the FLSA on behalf of herself and others similarly situated. No one else joined her lawsuit. The former employer offered Symczyk $7,500 for unpaid wages plus reasonable attorneys’ fees, costs, and expenses. Symczyk ignored the offer and it expired. The former employer then filed a motion to dismiss the case on the grounds of mootness, i.e., Symczyk no longer had a good claim because the former employer offered her the best relief that the court could award her. The trial court said that an offer like the one given to Symczyk voided her claim, and she agreed that her claim was moot. The case ended up before the Supreme Court on the issue of whether the offer also meant that Symczyk could no longer bring the collective claim of the similarly situated employees who never joined her lawsuit.

The question that intrigued us is whether the offer of full back pay, attorneys’ fees, costs, expenses, etc. would defeat the FLSA lawsuit, even if the plaintiff rejected it. The five Supreme Court justices making up the majority punted on the issue. Because Symczyk had agreed that her claim was gone based on the law in her jurisdiction, the majority assumed her claim was moot and never explored the issue. The majority went on to rule that because Symczyk’s individual claim was moot she could no longer advance the collective action and the entire case was properly dismissed.

Sticking with the football analogy, Justice Kagan stiff armed the majority and called them a bunch of dolts. The dissent said that the offer Symczyk ignored did not void her claim. Justice Kagan warned lower courts to rethink their “mootness-by-unaccepted-offer theory.” She also warned other courts who have not weighed in on the issue to reject the theory.

The law is still unsettled. No plaintiff in his or her right mind will ever again consent or agree that an unaccepted offer moots an FLSA claim. Nor will they admit that an accepted offer moots their claim. (See our post on Dionne.) We are back where we started. While offers of full back pay and fees likely will not kill the FLSA lawsuit, they may serve as an effective tool to limit the attorneys’ fees the plaintiff could ultimately recover.

Immigration and Employment Verification – Quick Hits

By Glenn Rissman on April 17, 2013 Posted in Immigration

New Form I-9. The U.S. Citizenship and Immigration Services issued a new Form I-9. USCIS has clarified that employers must start using the new Form I-9 as of May 7, 2013 for new hires. Earlier announcements suggested that employers had until May 8 to use the new form.

H-1Bs are gone. Filing season for new H-1Bs began on April 1 and by April 5, USCIS had received more than enough petitions to exceed the annual quota. USCIS is using a random lottery to select those H-1B petitions which will be processed. Foreign nationals who already have H-1B status are not subject to the annual cap.

Temporary Protected Status Extended for Certain Hondurans and Nicaraguans. USCIS is extending the TPS program for certain nationals from Honduras and Nicaragua for another eighteen months, until January 5, 2015. USCIS is automatically extending current TPS Honduras and Nicaragua EADs that have a July 5, 2013, expiration date for an additional six months. These existing EADs are now valid through January 5, 2014. An extension for qualifying El Salvadorans will likely be announced soon.

Electronic I-94 Cards. Customs and Border Patrol has announced that it will no longer use paper Form I-94 card arrival/departure records. I-94 cards are the white cards issued to visitors to the U.S., including nonimmigrants in H-1B, L-1, TN, O, P, and E status. The I-94 card, in combination with an unexpired foreign passport, may serve as a List A document to establish identity and work authorization for Form I-9 purposes. The I-94 card also serves as proof that the nonimmigrant is lawfully present in the United States. Travelers will be provided with the web address where they can print an I-94 card – www.cbp.gov/I94. (The website will not be active until the end of April.) Foreign workers holding a nonimmigrant visa authorizing them to work should make sure to print their I-94 card from the CBP website.

Make Sure Your Recruiters Know What NOT to Say to Employees

By Stearns Weaver Miller on March 18, 2013 Posted in Employee Handbooks & Policies, Employment Litigation, Wage & Hour/Employee Classification

Whether you have in-house or outside recruiters, make clear what they can and cannot say to your employees. On March 11, 2013, an Administrative Law Judge (“ALJ”) for the National Labor Relations Board made the recommendation that Aerotek, Inc., an employee staffing company, violated the National Labor Relations Act (“NLRA”) when its recruiters told employees not to discuss their wages with each other despite that not being company policy. Last year, the NLRB had found that Aerotek violated the NLRA by having a confidentiality clause barring employees from discussing wages. Aerotek scrapped the confidentiality clause. Aerotek argued that the recruiters were not acting on behalf of the company but were merely requesting a personal favor from the employees to make their jobs easier. The ALJ did not buy the argument. The ALJ said that the recruiters were acting as agents of Aerotek and the employees believed that the recruiters were conveying company policy. The recommendation required that Aerotek post a notice as a remedy for this particular violation stating: “WE WILL NOT tell employees that they are not to discuss wages with others.”

New Form I-9 Effective March 8, 2013

By Glenn Rissman on March 8, 2013 Posted in Immigration

The U.S. Citizenship and Immigration Services (USCIS) announced that, beginning March 8, 2013, employers must begin using a revised version of the Form I-9 to verify the employment eligibility of new hires. The new form will reflect a revision date (Rev. 03/08/13)N. As of the time of writing, the new Form I-9 was not available on the USCIS website, www.uscis.gov. The USCIS is permitting employers to use the older version of the Form I-9 for sixty days – until May 7, 2013.

The new Form I-9 is now two pages, excluding the instructions. The new form also adds data fields to capture the employee’s foreign passport information (if applicable), telephone number, and email address. The USCIS plans to update the I-9 Handbook for Employers within the next week to address the changes in the revised Form I-9.

Employers should begin using the revised Form I-9 as soon as possible. Please visit the USCIS’s I-9 Central to access the most current version of the Form, once it is made publicly available.

FMLA Update: Revised FMLA Regulations Mandate Compliance With GINA’s Confidentiality Requirements

By Stearns Weaver Miller on February 25, 2013 Posted in Disability & Leave, Legislation & Regulations

The revised regulations for the Family and Medical Leave Act (FMLA) require that records or certifications submitted for FMLA leave that contain genetic information and family medical history are subject to the confidentiality requirements of the Genetic Information Nondiscrimination Act of 2008 (GINA). Click here for a link to GINA’s confidentiality regulations (29 C.F.R. §1635.9).

“Genetic information” includes information about an employee’s genetic tests and services.
GINA covers an employee’s family medical history, that is, information regarding any disease or disorder that has been or could reasonably be diagnosed by a health care professional in an employee’s family member. An employer will receive this type of information when an employee requests FMLA leave to care for a family member with a serious health condition or for a service member with a serious injury or illness, and may receive it as part of a certification for the employee’s own serious health condition (i.e., the health care provider reports that employee’s parent also had heart disease).

FMLA documents that contain genetic information or family medical history must be treated as confidential and maintained in a medical file that is separate from an employee’s personnel file. Additionally, these documents may not be disclosed by the employer, except in limited circumstances such as a disclosure made in support of an employee’s request for FMLA leave. The penalties for violation of GINA’s confidentiality requirements are quite severe and could be in addition to penalties under the FMLA. As such, it is important for employers to comply with GINA’s confidentiality requirements.

Employers should try to avoid acquiring genetic information about the employee when the employee is seeking FMLA leave for his or her own serious health condition (as opposed to that of a family member or service member). To minimize this possibility, an employer should include certain “safe harbor” language with the certification form to be completed by the employee’s health care provider for FMLA leave (either in a cover letter to the form, a label on the form, or as an attachment to the form) and when requesting health information from an employee for other reasons, such as a fitness for duty evaluation or to support an employee’s request for non-FMLA leave under the employer’s policies or for an accommodation under the Americans With Disabilities Act. Click here for the safe harbor language.

The safe harbor language should not be included with the health care provider certification form given to an employee seeking FMLA leave for a family member or service member because the employer will need family medical history information regarding that individual to determine if the employee qualifies for FMLA leave.

FMLA Update: Revised Regulations, a New Poster and a New Certification Form

By Stearns Weaver Miller on February 18, 2013 Posted in Disability & Leave, Legislation & Regulations

The Department of Labor (“DOL”) published revisions to certain regulations for the Family and Medical Leave Act (FMLA), a new poster and a new certification form. The following highlight key issues for employers with regard to the revisions.

New FMLA Poster. The DOL revised its FMLA poster, also referred to as the “General Notice”, effective February 2013. Employers should post the new FMLA poster in the workplace so it is visible to employees and applicants and on the employer’s on-line application site so it is visible to applicants. The poster also should be included in an employee handbook, either as standalone document or as an attachment to the employer’s FMLA policy. Click here for the new poster.

Military Family Leave Regulations. The revised FMLA regulations implement the amendments to the FMLA’s military family leave provisions signed into law in October 2009. The regulations become effective on March 8, 2013.

Qualifying Exigency Leave.

An eligible employee may take qualifying exigency leave for a spouse, son, daughter or parent who is a member of the Regular Armed Forces if that member is deployed to a foreign country. Previously an employee could only take qualifying exigency leave for a family member in the Reserve Armed Forces.
An eligible employee may take qualifying exigency leave for a spouse, son, daughter or parent who is a member of the Reserve Armed Forces during the period of time that Reserve member is both (i) deployed to a foreign country and (ii) the deployment is under a Federal call or order to active duty in support of a contingency operation (as defined by federal law). The 2009 regulations did not require the Reserve member to be deployed to a foreign country.
The length of time that an eligible employee may take qualifying exigency leave for “Rest and Recuperation” has been increased to fifteen (15) days. Leave for this reason was previously limited to five (5) days.
There is a new category of qualifying exigency leave: Parental Care, which is leave to care for the parent of a military member where the parent is incapable of self-care (e.g., the parent requires active assistance with activities of daily living).
- The permissible parental care activities are: arranging for alternative care of the parent, providing care for the parent on an urgent, immediate need basis, to admit or transfer the parent to a care facility, and to attend meetings at a care facility if necessary due to the military member’s active duty or call to active duty.
Note: The military member must be the spouse, son, daughter or parent of the eligible employee and the eligible employee must be seeking leave to care for that military member’s parent.
Click here for the regulation text (28 C.F.R. §825.126) concerning qualifying exigency leave.

Military Caregiver Leave

As of March 8, 2013, an eligible employee may take military caregiver leave to care for a “covered veteran” who is undergoing medical treatment, recuperation or therapy for a serious injury or illness. Military caregiver leave was previously only available to care for a current member of the Armed Forces.
A “covered veteran” is defined as an individual who was a member of the Armed Forces and was discharged or released under conditions other than dishonorable at any time during the five-year period prior to the first date the eligible employee takes FMLA leave to care for the covered veteran.
Note: The calculation of this five-year period does not include the interval of October 28, 2009 through March 8, 2013. The DOL excluded this interval because of length of time it took to issue the revised regulations.
For a covered veteran, there are four methods to establish that he or she has a serious injury or illness. The DOL adopted a new certification form, Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave, to assist with obtaining the relevant information. Click here for the certification form.

For a current member of the Armed Forces, the revised regulations expand the definition of “serious illness or injury” to include pre-existing illness or injuries aggravated in the line of duty. Click here for the regulation text (28 C.F.R. §825.127) concerning the applicable definitions of “serious injury or illness.”

The revised regulations permit a health care provider not affiliated with the Department of Defense, Department of Veterans Affairs (VA) or the Tricare Network to certify a military member’s serious injury or illness. Click here for the applicable regulation text (28 C.F.R. §825.310).

Special Rules of Airline Flights Crew Employees.

The revised regulations implement the Airline Flight Crew Technical Corrections Act, which was signed into law on December 21, 2009. The regulations establish special rules for airline flight crew employees concerning the hours of service requirement for determining FMLA eligibility, calculation of leave, and recordkeeping requirements. Click here for the regulation text (28 C.F.R. §§825.801-803).

Eleventh Circuit Holds Liquidated Damages Discretionary for FLSA Retaliation

By Glenn Rissman on February 15, 2013 Posted in Employment Litigation, Wage & Hour/Employee Classification

On February 13, the Eleventh Circuit Court of Appeals, which has jurisdiction over Florida, ruled that liquidated damages for a retaliation claim under the Fair Labor Standards Act (“FLSA”) are discretionary, and not mandatory. Moore v Appliance Direct, Inc. is the first decision on this issue in the Eleventh Circuit, which also covers Georgia and Alabama.

The plaintiffs in the Moore case sued their former employer for retaliation under the FLSA because the employer had outsourced their jobs as delivery drivers while their lawsuit against the employer for failure to pay overtime was pending. (The overtime case later settled.) A jury awarded each of the plaintiffs $30,000 in damages for retaliation. The plaintiffs then asked the court to award liquidated damages. The trial court declined to do so.

Under the FLSA, the award of liquidated damages (a doubling of the back pay) is mandatory when a plaintiff prevails on a claim for unpaid minimum wages or overtime, unless the employer acted in good faith and had reasonable grounds for believing that it had not violated the law. The plaintiffs argued that the award of liquidated damages was also mandatory when an employer is found liable for retaliation under the FLSA. Both the trial court and appellate court disagreed. The language in the FLSA says that when an employer violates the FLSA’s retaliation provision, it “shall be liable for such legal or equitable relief as may be appropriate to effectuate the purpose [of the retaliation provision], including without limitation, employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.” The Eleventh Circuit determined that the language in the statute gives it discretion whether or not to award liquidated damages for a violation of the FLSA’s retaliation provision. In other words, the court has discretion to determine whether awarding liquidated damages is appropriate under the facts of the case.

This case is a small victory for employers. It is better not to retaliate in the first place. However, an employer liable for FLSA retaliation will at least have an argument that the facts do not warrant the doubling of lost wages as liquidated damages.

Florida Appellate Court Applies Amended Misconduct Standards for Unemployment Compensation Benefits

By Stearns Weaver Miller on February 13, 2013 Posted in Employee Benefits & Compensation, Employment Litigation

In August 2011, we blogged about the amendments to the unemployment compensation statutes, which included a new definition of misconduct (see Florida Employers Get Immediate Unemployment Compensation Relief). The definition of misconduct is:

A violation of an employer’s rule, unless the claimant can demonstrate that:

He or she did not know, and could not reasonably know, of the rule’s requirements;

The rule is not lawful or not reasonably related to the job environment and performance; or
The rule is not fairly of consistently enforced.

On February 5, 2013, a Florida appellate court issued an opinion in one of the first cases applying the new definition of misconduct.

In Critical Intervention Srvcs. v. Florida Reemployment Assistance Appeals Comm’n, a former employee of Critical Intervention Services (“CIS”), Winston Edwards, applied for and was granted reemployment assistance benefits (also known as unemployment compensation benefits). Edwards was a security officer assigned to a Save-A-Lot store from late December 2009 through his termination in November 2011. Although he was a good officer with no record of discipline, CIS terminated Edwards for violating its rule against pursuing suspected shoplifters beyond a store’s entrance. A few months before, CIS had posted a new policy that security officers were not permitted to pursue shoplifters past store entrances/exits at Save-A-Lot locations. Edwards testified that he had no actual knowledge of the policy. Despite making the factual finding that Edwards was discharged for violating the shoplifting policy, the appeals referee concluded that Edwards had not committed misconduct. CIS appealed.

The 1^st District Court of Appeal said that CIS met its burden to show misconduct. It said, “[h]ere, there is no dispute that the no-pursuit rule was in place and that Edwards twice went into the Save-A-Lot parking lot to interface with the suspect; CIS therefore carried its burden by submitted evidence of Edward’s rule violation.” The appellate court concluded that the appeals referee’s decision only considered the first part of the exception to the misconduct definition (that Edwards did not know about the shoplifting policy) and failed to altogether consider the second part of the definition (whether Edwards “could not reasonably” have known about the shoplifting policy). The decision was remanded for consideration of the latter part of the misconduct definition.

Collective Action Waivers Survive Court Scrutiny Despite NLRB Ruling

By Stearns Weaver Miller on February 13, 2013 Posted in Employment Litigation, Labor Law

On February 1, a federal court in New York joined appeals courts in the 3^rd, 4^th, 5^th, 8^th, 9^th and 11^th circuits in finding enforceable a waiver of the right to bring collective actions under the Fair Labor Standards Act (FLSA) in arbitration agreements. This decision is at odds with the National Labor Relations Board’s (“NLRB”) D.R. Horton, Inc. decision issued last year which ruled that requiring employees, as a condition of employment, to sign an arbitration agreement barring collective or class actions for employment-related claims violated the National Labor Relations Act (see Blog post, NLRB Says Not To Requiring Employees To Sign Arbitration Agreements Prohibiting Group of Class Action).

In Janira Torres et al. v. United Healthcare Services, Inc., a group of sales representatives brought a collective wage-and-hour action against UnitedHealth Group in federal court in the Eastern District of New York. UnitedHealth Group filed a motion to compel arbitration because the sales representatives entered into an arbitration agreement that included a waiver of their rights to bring a collective or class action at the time they began working for the company. The court granted the motion stating that “[t]his scant legislative history is not at all persuasive that Congress intended the right to participate in an FLSA collective action to be an unwaivable right.” The court also commented that it need not defer to the NLRB’s ruling in D.R. Horton.

Last month, the 8^th Circuit, in Owen v. Bristol Care, likewise ruled that an employer may include a waiver of the right to bring collective actions under the FLSA in a mandatory arbitration agreement. The court concluded that an arbitration agreement with a collective action waiver falls outside the limitations of D.R. Horton’s holding when the agreement “does not preclude an employee from filing a complaint with an administrative agency such as the Department of Labor (which has jurisdiction over FLSA claims, see 29 U.S.C. § 204)” and when “nothing in the [agreement] precludes any of these agencies from investigating and, if necessary, filing suit on behalf of a class of employees.”

As a result, an employer operating in states governed by the 3^rd, 4^th, 5^th, 8^th, 9^th and 11^th circuits and the Eastern District of New York has strong precedents for including FLSA collective action waivers in arbitration agreements.

Be Mindful Who is Included in Your Tip Pool – FLSA Lawsuits are Lurking

By Glenn Rissman on February 5, 2013 Posted in Employment Litigation, Wage & Hour/Employee Classification

A recent case from the federal court in Orlando provides a reminder that sharing pooled tips too widely could violate the Fair Labor Standards Act and expose the employer for failing to pay the minimum wage. In Rubio v. Fuji Sushi & Teppani, Inc., a former server sued the restaurant where she had worked for failure to pay the minimum wage because the restaurant included chefs in the tip pool.

Like many restaurants, the employer in Rubio relied on a tip credit, which allows the employer to pay the employee, directly, less than the minimum wage, so long as the tips the employee receives supplements the employee’s pay to equal or exceed the minimum wage. (In Florida, the minimum wage for 2013 is $7.79 per hour, and employers must pay tipped employees a direct wage of at least $4.77 per hour.) The employer in Rubio also had a tip pool. Under the FLSA’s rules, a tip pool may only include customarily tipped employees. If the employer takes a tip credit in connection with a tip pooling arrangement, the tip credit is only valid if the tip pool includes only those employees who customarily and regularly receive tips. In other words, the employer will lose the tip credit and violate the FLSA if the tip pool includes employees who would not normally be characterized as tipped employees. The issue in Rubio was whether the chefs were properly included in the tip pool. The court looked at the legislative history of the FLSA, Department of Labor internal guidance, and cases from other jurisdictions and concluded that chefs were not tipped employees under the FLSA and should not have shared in the tip pool. Because the chefs shared in the tip pool, the restaurant violated the FLSA and would have to pay the minimum wage to the employee for all the hours she worked, less the money the employer already paid to her directly.

In deciding that chefs were not tipped employees, the court considered that chefs do not regularly interact with customers, unlike servers, buspersons, foodrunners, hosts, or even sushi chefs. The interaction that chefs had with customers was rare and incidental. The court concluded that the chefs did not provide the kind of service to customers in a way that warranted a share of the gratuity left by the customer.

The improper inclusion of non-traditionally tipped employees in a tip pool has become a focal point for FLSA lawsuits in the last year or so. Employers who rely on tip credits using a tip pooling agreement should ensure that only those employees who customarily receive tips are allowed to participate in the tip pool.