Category: FLSA

Third Circuit Upholds FLSA Standards 

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In a recent case before the Third Circuit, the Court upheld the willfulness standard necessary to extend the limitations period for FLSA claims while allowing a good faith standard for awarding liquidated damages. Souryavong v. Lackawanna Cty., 872 F.3d 122 (3d Cir. 2017). Plaintiffs filed suit against Defendant, Lackawanna County, for failing to pay overtime wages in violation of the FLSA. The employee Plaintiffs each worked two part time jobs for Defendant, who tracked the hours worked for each Plaintiffs’ jobs individually but neglected to aggregate the hours between the jobs resulting in a failure to pay overtime wages. Plaintiffs appealed from a lower court decision finding that Defendant did not willfully violate the FLSA but still awarded liquidated damages due to Defendant’s lack of good faith attempts of compliance to the FLSA.

The Court upheld the lower court’s decision that Defendant did not willfully violate the FLSA. Finding a willful violation is important for an FLSA claim because it extends the limitations period from two years to three years thereby enabling the plaintiff to recover an additional year of lost pay. To show willfulness, plaintiff cannot just show that defendant had a general awareness of the FLSA, but plaintiff must show actual awareness of the specific FLSA violation. Here, the Court upheld the lower court’s finding that Defendant did not meet the willfulness standard, and thus Plaintiffs were not eligible for an extension of the FLSA limitations period.

While the Court found that Defendant did not willfully violate the FLSA, they upheld that Defendant was liable for liquidated damages under a good faith standard. In the lower court, Plaintiffs argued that Defendant was liable for liquidated damages because they willfully violated the FLSA. To the contrary, Defendant argued that they were not liable for liquidated damages because they acted in good faith and the FLSA violations were unintentional. The lower court found that Plaintiffs were entitled to liquidated damages; however, their ruling was based on Defendant’s failure to prove good faith rather than Plaintiff’s willfulness argument. In this case, Plaintiffs argued that the lower court’s finding in favor of liquidated damages reaffirmed their assertion that Defendant was willful and thereby entitled them to the extended limitations period in addition to liquidated damages. However, the Third Circuit held that the lower court’s ruling had no bearing on the extension of the limitations period because it was based merely on Defendant’s lack of evidence of good faith attempts at FLSA compliance and not on their willfulness.

Overall, the Third Circuit reaffirmed the need to show willfulness to extend the limitations period for overtime violations claims under the FLSA. However, if an employer cannot provide sufficient evidence of good faith attempts at FLSA compliance, then employees are entitled to liquidated damages.

For more information, call our Philadelphia employment lawyers for Fair Labor Standards Act in Philadelphia and South Jersey at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

 

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Third Circuit Ruling FLSA Overtime Wages

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On May 23, 2016 the Third Circuit Court of Appeals held that truck drivers who mainly drove intrastate, and only incidentally or occasionally drove interstate during their business, were entitled to the benefits of the Fair Labor Standards Act (FLSA) and Pennsylvania Minimum Wage Act (PMWA) regarding overtime pay rates. Mazzarella v. Fast Rig Support, LLC, 823 F.3d 786 (3d Cir. 2016). Drivers for a trucking company claimed that they often worked over forty hour weeks, and yet were only compensated for overtime when they worked over forty-five hour weeks. The trucking company attempted to argue that because it was a motor carrier, under the Department of Transportation’s jurisdiction, and its business transporting water to fracking sites involved transporting an item between “a State and a place in another State” it was consequently exempt from the FLSA through the Motor Carrier Act (MCA).

The Third Circuit however rejected the trucking company’s representation and classification of the nature of its business. The Court found that the operations of the drivers in their work was not part of a “continuous stream of interstate travel” that would fall under the MCA’s exemption to the FLSA. All evidence presented by the trucking companies demonstrated that their operations only occasionally and incidentally impacted interstate commerce. Their operations that only occasionally entailed driving to other states were not part of a “practical continuity of movement in interstate commerce”. The Court ruled that exemptions to FLSA should be narrowly construed against the employer to ensure employees are properly protected. The high burden of proving an exemption to the FLSA’s overtime requirements was not met by the mere statements and unspecific evidence put forward by the company to demonstrate the interstate nature of its employees’ operations. The truck drivers’ award of $31,000 was affirmed by the Court to compensate them for the overtime worked and guarantee their protection under the FLSA.

For more information, call our Philadelphia employment lawyers at Sidkoff, Pincus & Green at 215-574-0600 or submit an online inquiry.

Superior Court Upholds PA Overtime Rate Method  

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The Superior Court of Pennsylvania recently ruled in a case that dealt with the proper method of calculating overtime wages paid to non-exempt employees. In Chevalier v. General Nutrition Centers, Inc., 177 A.3d 280 (Pa. Sup. Ct. 2017) employees at GNC, a company selling health and nutrition related products, brought suit against the company alleging that the calculation of their overtime pay violated Pennsylvania Minimum Wage Act (PMWA).The PMWA requires “a payment of at least one and one-half of the employees’ regular rate” for each hour worked in excess of forty hours. Id. GNC’s method of calculating overtime pay is called the fluctuating workweek (“FWW”) method. Id. The FWW method takes the salaried employee’s weekly pay and divides it by the total number of hours worked (including overtime hours) which produces a certain dollar amount which is considered the “regular rate”. This regular rate is then halved (.5) and multiplied by the number of hours of overtime worked which produces the final overtime dollar amount. The employees’ method of calculation, also referred to as the forty-hour method, takes the forty-hour work and divides it by the hourly rate (yielding a higher “regular rate” than the FWW). The regular rate plus half of the regular rate (1.5) is then multiplied by the hours worked (which produces a substantially higher dollar amount than the FWW).

GNC argued that the United States Supreme Court held that the FWW method was lawful under the FLSA (“Fair Labor Standards Act”) and the PA General Assembly adopted the “regular rate” terminology in the PMWA’s overtime provision. In addition PA case law instructs that, unless a contrary intent appears, when a PA statute tracks the language of a federal statute, PA courts should consult federal authority for guidance in ascertaining the meaning of the term in question. Notably, nothing in the text of the PMWA suggest that the General Assembly intended to give a meaning to “regular rate” different from that establishes under the FLSA. GNC further argued that while the PMWA does authorize the PA Department of Labor and Industry to promulgate regulations defining “regular rate”, it hasn’t done so, which shows there was no intent to bar the FWW method.

The employees countered that the important difference between the PMWA and the FLSA is that the policy statements in the preamble to the PMWA demonstrate that it was intended to provide greater protection for employees in Pennsylvania. They also emphasized that although there may be no regulation that prohibits the FWW method, Pennsylvania has not promulgated regulation that authorizes the FWW. Id. Lastly, the employees argued that the FWW method runs directly counter to the purpose of the PMWA which is promoting employment by incentivizing employers to hire more workers as opposed to paying existing workers overtime.

The Court, in its analysis, quickly disposed of the issue pertaining to the “one and one half” premium on overtime hours. It concluded that the trial court correctly determined that the second part of GNC’s FWW method, paying an overtime premium of one-half the regular rate, violated the PMWA. The Court reasoned that had the Department wanted to authorize one-half time payment it surely knew how to do so. Rather, the Department adopted the “one and one-half times” language from the FLSA overtime provision. Clear rules of statutory construction demonstrate that the General Assembly intended the multiplier to be one and one half as opposed to one-half.

In addressing the proper calculation of “regular rate”, the Court concluded that absent legislative or regulatory action, GNC’s calculation of the “regular rate” did not violate the PMWA. The Court began by examining the history of the overtime provisions in both the FLSA and the PMWA. The Court said that by the time the PMWA was enacted, the FLSA was clearly understood to permit employers to calculate the “regular rate” of salaried employees by reference to the total hours worked. This idea was affirmed in a Supreme Court case and then codified in a series of federal regulations. The Court concluded further that the General Assembly was aware of the FLSA, knew how to deviate from the FLSA, but did not do so. Finally, the Court said that the Employees argument based on the PMWA’s general purpose is unavailing. Therefore, the Court upheld the GNC’s FWW method of calculating overtime hours but struck their half multiplier in a win-lose situation for both parties.

For more information, contact the Philadelphia overtime lawyers at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

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Supreme Court holds “Service Advisors” exempt under FLSA

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On April 2, 2018, the United States Supreme Court held that service advisors at car dealerships are exempt from the FLSA’s overtime-pay requirements under 29 U.S.C. 213(b)(10)(A). Encino Motorcars, LLC v. Navarro, 138 S.Ct. 1134 (2018). In Encino Motorcars, the Court considered the scope of the Fair Labor Standards Act (FLSA) which requires employers to pay overtime to covered employees who work more than 40 hours a week. The FLSA exempts from the overtime-pay requirements “any salesman, parts man, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership. Service advisors at car dealerships “meet customers; listen to their concerns about their cars; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as the services are performed and explain the repair and maintenance work when customers return for their vehicles.”

The Court held that a service advisor is “obviously a salesman”, since the statute did not provide a definition for “salesman” the court construed the term based off its ordinary meaning. The ordinary meaning of “salesman” is someone who sells goods or services. The Court concluded that service advisors sell service to customers for their vehicles. In addition, they are primarily engaged in servicing automobiles because they are integral to the process of providing maintenance and repair even if they don’t physically repair the car. The Court rejected the distributive canon employed by the Ninth Circuit to match “salesman” with “selling” and “parts man and mechanic” with “servicing”. The Court then examining the Ninth Circuits reliance on legislative history which it found unpersuasive. Even for “those [Members of the Court] who consider legislative history, silence in legislative history . . . cannot defeat the better reading of the text and statutory context.”

The Court relied heavily on the text of 29 U.S.C. 213(b)(10)(A), concluding that service advisors are exempt from the overtime-pay requirement because they are “Salesman . . . primarily engaged in servicing vehicles. The case was reversed and remanded for further proceedings.

For more information or to discuss an issue regarding overtime, call Sidkoff, Pincus & Green at 215-574-0600 or contact us online. Our Philadelphia overtime lawyers represent clients in Pennsylvania and New Jersey.

Hearst Corporation in Unpaid Intern Lawsuit

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Approximately five years after interns filed a lawsuit against Hearst Corporation, the Second Circuit Court of Appeals has ruled that the company did not systematically exploit interns by having them perform entry-level work without pay. The interns claimed that Hearst Corp. violated federal and state law when it declined to pay thousands of interns.

Internship vs Entry-Level

The lead plaintiff, Xuedan Wang, alleged that 3,000 interns at Hearst’s numerous publications, including Elle, Marie Claire, Cosmopolitan, and Seventeen magazines, were exploited in violation of the Fair Labor Standards Act (FLSA) and New York state laws. The FLSA and state laws set forth specific requirements for internships, which distinguish them from entry-level jobs. To be exempt from the minimum wage requirements, employers must ensure that internships benefit the interns, among other things.

According to Second Circuit Judge Dennis Jacobs, the question before the Court was whether Hearst Corp. offers bona fide for-credit internships, or whether it relied on student labor to avoid compensating entry-level employees. The key case that speaks to the legal standard is Glatt v. Fox Searchlight Pictures Inc. In this case, the Court considered whether the intern or their employer was the primary beneficiary of the relationship. If the employer is the primary beneficiary, it cannot be deemed an internship, and is subject to the minimum wage requirements set forth under the Fair Labor Standards Act.

In the Hearst Corp. case, Judge Jacobs found that Hearst made it clear to the interns that they would not be paid, and that the internships provided training similar to those provided in an educational environment. The students were also told that the internships were tied to a formal education program.

Distinguishing the Difference

The plaintiffs argued that internships should not include menial and repetitive tasks, with little supervision or guidance.  These, according to the plaintiffs, were tasks more likened to employment than an educational internship. However, the Judge found that many useful internships are designed to correct the impression that work is just as rewarding and fulfilling as school. Repeating administrative and organizational tasks, she ruled, can provide useful skills such as how to be more organized and focused in a professional setting. Plaintiffs can still appeal this ongoing ruling to the United States Supreme Court.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Represent Victims of FLSA Violations

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C., we handle all types of employment litigation, including claims that an employer has violated the Fair Labor Standards Act, or local laws, by failing to pay overtime, meet minimum wage requirements, and more. To learn more about how we can help you and to schedule a confidential consultation, call us today at 215-574-0600 or contact us online. We represent clients in employment litigation in Pennsylvania and New Jersey.