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Ninth Circuit Holds That FLSA’s Minimum Wage Requirement Applies to Weekly Per-Hour Average

Decision: On November 15, 2017, the Ninth Circuit Court of Appeals adopted the views of the US Department of Labor (DOL) and the Second, Fourth, Eighth, and DC Circuits by holding that the hourly minimum wage requirement of the Fair Labor Standards Act (FLSA) applies to workers’ weekly per-hour average pay and not to actual per-hour pay (Douglas v. Xerox Business Services LLC, No. 16-35425). Affirming the district court’s grant of summary judgment to Xerox, the appellate court agreed that the company did not owe a conditionally certified class of workers back pay for specific hours they may have worked at sub-minimum wage levels because their weekly per-hour average pay exceeded the minimum wage. Although the court noted that the FLSA does not specify whether minimum wage should be calculated on a per-week or per-hour basis, it found “instructive” that the DOL interprets the “workweek” as the “standard period of time over which wages may be averaged to determine whether the employer has paid [the minimum wage].”

Impact: The Ninth Circuit’s decision is consistent with those of every federal Court of Appeals that has addressed the hourly minimum wage requirement. In dismissing the plaintiffs’ minimum wage claims, the court explained that “[w]e favor consistency because businesses subject to the FLSA, like Xerox, often operate in multiple jurisdictions” and “[t]o upset those practices by imposing different requirements in different jurisdictions would be burdensome and impractical.” While the Supreme Court has not weighed in on this issue, given the uniformity among the DOL and multiple Courts of Appeals, employers can continue to apply, with some confidence,  a weekly per-hour average in any jurisdiction where they are subject to the FLSA’s minimum wage requirement while monitoring any future legal developments.

California Court of Appeal Holds Employer Potentially Liable for Failure to Prevent Sexual Assault of Employee by Trespasser

Decision: On October 26, 2017, the California Court of Appeal held that an employer hotel could be held liable under the Fair Employment and Housing Act (FEHA) for the sexual harassment of an employee who was raped by a non-employee trespasser on the employer’s premises (M.F. v. Pacific Pearl Hotel Management LLC). Prior to the assault, the trespasser had aggressively propositioned other employees on the employer’s premises, and the hotel’s management had been aware of the trespasser’s presence on the property and that he had propositioned other employees. The court held that if plaintiff’s allegations were true, they were sufficient to establish that the employer knew or should have known of the danger posed by the trespasser to its employees and that the employer had a duty to protect the plaintiff from the trespasser’s conduct. The court further noted that as long as the employee could state a claim under FEHA, the workers’ compensation exclusivity doctrine does not bar her claims under FEHA.

The court rejected the hotel’s claim that it was not responsible to the plaintiff under FEHA because the initial harassment was not directed at her, noting that the employer had received reports and knew that the nonemployee’s conduct placed employees at risk of sexual harassment. The court explained: “[T]he more egregious the abuse and the more serious the threat of which the employer has notice, the more the employer will be required under a standard of reasonable care to take steps for the protection of likely future victims.” 

Impact: The California Court of Appeal’s decision highlights the importance of employers acting promptly in investigating and eliminating potentially dangerous or harassing behavior on their premises, whether by employees or non-employees. Employers should have policies and procedures in place that address workplace hazards and should ensure that employees understand their role in acting swiftly and efficiently to address such issues. As demonstrated by the M.F. case, liability for harm arising from workplace hazards, including sexual assault in the workplace, is not limited to workers’ compensation.

NLRB Judge Determines Home Improvement Store Delivery Drivers Are Independent Contractors

Decision: On December 17, 2017, a National Labor Relations Board (NLRB) Administrative Law Judge (ALJ) issued a decision in Menard Inc., and Local 153, Office & Professional Employees International Union, AFL-CIO, holding that Menard’s delivery drivers were properly classified as independent contractors, notwithstanding the fact that Menard exercised some degree of control over the drivers and even undertook certain quality control efforts. Following a detailed analysis of Menard’s contractual arrangements with the drivers, and evidence of the actual course of performance, the ALJ concluded that “[o]nly one factor – the level of skill required – weighs in favor of employee status [but] [t]hat factor is outweighed by the many factors favoring independent contractor status.”

Impact: Several recent NLRB decisions have determined that workers are employees rather than independent contractors. For employers, this recent decision is a welcome reprieve from that trend. Moreover, the ALJ’s detailed analysis should prove a useful guide for employers who want to ensure that their independent contractor determinations are upheld. Menard’s carefully structured agreements gave them just enough control and supervisory authority to ensure a good customer experience but without converting the drivers into employees. That has been a difficult needle to thread the past few years.

Sixth Circuit Cautions Against Overreliance on DOL Opinion Letters

Decision: On November 20, 2017, the Sixth Circuit Court of Appeals held that an employer had not established its good faith defense under the Fair Labor Standards Act (FLSA) notwithstanding the employer’s claim that it acted in reliance on a 2005 Department of Labor (DOL) opinion letter (Perry v. General Partner, Case No. 16-1010). The employer had classified various recruiting, staffing management and sales personnel as exempt, relying on a 2005 DOL opinion letter which stated that staffing managers were generally exempt under the administrative exemption. The court held, however, that the employees at issue had substantially different roles and responsibilities than those discussed in the DOL letter, notwithstanding other more general similarities. The employer’s classification was, therefore, not “in conformity with” the 2005 opinion letter, as required to establish the FLSA’s good faith reliance defense.

Impact: The Sixth Circuit’s ruling cautions employers to read DOL opinion letters narrowly and to conduct a careful analysis of the employees at issue before deciding that an opinion letter authorizes the employer’s decision to classify employees as exempt.

Employer Settles EEOC’s Challenge to Its Return to Work Policy for $9.8 Million

Update: In Equal Employment Opportunity Commission v. American Airlines, Inc. and Envoy Air Inc., the Equal Employment Opportunity Commission (EEOC) challenged American Airlines’ “100% return-to-work policy” that required employees to return to work from an absence without any restrictions as violating the Americans with Disabilities Act (ADA). Among the other charges, the EEOC said that the airline did not provide intermittent leave as an accommodation and did not provide a stool behind a ticket counter to accommodate an employee with a standing restriction, both in violation of the ADA. American Airlines settled the lawsuit by entering a consent decree under which the EEOC will hold a $9.8 million unsecured claim in the airline’s bankruptcy proceeding and American Airlines agrees to pay a maximum of $150,000 in settlement administration costs. Other provisions of the consent decree include a promise from the airline to end the challenged policy, refrain from engaging in any discriminatory or retaliatory practices, engage in the interactive process with employees who request a reasonable accommodation under the ADA, and provide ADA training to employees.

Impact: The EEOC’s lawsuit serves as a reminder to employers that their return to work policies must take into account the ADA’s mandate that employers provide reasonable accommodations to disabled employees unless doing so would cause significant difficulty or expense for the employer. It also highlights that this issue remains an EEOC enforcement priority. Accordingly, employers should regularly review their policies and practices to ensure they comply with federal and state reasonable accommodation requirements. Employers are also well-advised to train their managers and human resources staff regarding the ADA’s reasonable accommodation provisions and how to ensure that they engage in the interactive process with disabled employees who request such accommodations.

US Senate Confirms Peter Robb as the Next NLRB General Counsel

Update: On November 8, 2017, the US Senate confirmed President Donald Trump’s nominee, Peter Robb, as general counsel of the National Labor Relations Board (“NLRB” or “Board”) by a party line vote of 49-46. Robb previously served as chief counsel to then-NLRB member Robert Hunter before spending more than 20 years in private practice as a management-side labor attorney. Robb replaces outgoing General Counsel Richard Griffin, whom former President Barack Obama appointed to a four-year term in 2013.

Impact: The confirmation of Robb is likely to accelerate the Republican-controlled NLRB’s anticipated agenda of overturning a number of Obama-era Board decisions that expanded workers’ rights. During the Obama administration, the Democratic-controlled NLRB took an expansive view of the National Labor Relations Act’s workplace protections on a variety of issues, including joint employer status, arbitration agreements, social media usage and class action waivers. As general counsel, Robb will have the ability to not only shift the internal policy at the NLRB back to a more employer-friendly focus, he will also be able to submit cases to the Board that will present opportunities to overturn the prior Board’s pro-labor decisions under President Obama.