Edwards Wildman Client Advisory: Recent Developments in Wage and Hour Law


    In our continued effort to keep our clients and friends informed, the Edwards Wildman Labor & Employment Group provides this monthly update on important developments in the world of wage and hour law. For other articles about FLSA, wage and hour and other labor and employment issues, please visit our Newsstand.

    Federal Agencies

    Wal-Mart Stores, Inc. agreed to pay $5.29 million to resolve alleged violations of the FLSA' overtime provisions. On May 1, the Department of Labor announced the settlement involving current and former vision center managers and asset production coordinators who Wal-Mart previously had treated as exempt from overtime.

    The Department of Labor's Wage and Hour Division initiated an enforcement action on May 15 to ensure that contractors and subcontractors at Fort Sill Army Base and Altus Air Force Base in Oklahoma comply with the FLSA and other acts. The DOL announced its investigation due to the vulnerability of workers in the food service, custodial, landscaping and security industries.

    On May 16, the Department of Labor's Wage and Hour Division opened an office in Redding, California, another demonstration that the DOL is emphasizing enforcement activities in Northern California.

    The DOL announced on May 23 that Bierlein Cos. of Clarksville, Tennessee, agreed to pay more than $200,000 to 147 construction workers for violations of the FLSA's overtime and recordkeeping provisions.

    On May 30, the DOL announced that Aspen Power of Lufkin, Texas paid nearly $500,000 in overtime back wages to 135 current and former construction workers who had been classified erroneously by Aspen Power as independent contractors.

    Federal Courts

    The federal court in the District of Columbia upheld the Department of Labor's compliance with the Administrative Procedures Act when it adopted a new regulation requiring employers to advise tipped employees of the "tip credit" requirements of the FLSA.

    After finding violations of a consent judgment invoking the FLSA, a federal court in Kansas on May 2 ordered China Star of Wichita, Inc. and its owners to pay more that $220,000 in back minimum and overtime wages to 11 cooks, dishwashers and busboys.

    In a case arising out of a lawsuit in federal court in Minnesota, the Department of Labor announced on May 3 that a landscaping firm had agreed to pay $500,000 in back overtime, damages and penalties for FLSA violations. The case involved the company's failure to pay time and one-half for hours worked over 40 in a week.

    In yet another donning and doffing case, the United States Court of Appeals for the 7th Circuit ruled on May 8 that U.S. Steel Corp. is not obligated to pay for time employees take to change into work clothes and then travel from the locker room to their work stations. The case was filed in Indiana by 800 employees of U.S. Steel's Gary, Ind. works.

    Also on May 8, the 7th Circuit held that present and former pharmaceutical Eli Lilly sales reps are not entitled to overtime under the FLSA because the reps performed administrative office and not manual work and their duties involved the exercise of discretion and independent judgment.

    On May 31, in the United States District Court for the District of Maryland, Judge Catherine C. Blake conditionally certified an FLSA class action involving loan officers at Prosperity Mortgage Co. Judge Blake's preliminary finding is that loan officers who shared a duty of selling loans, and who PMC had classified as exempt, appeared to be similarly situated, because they were viewed as outside salespersons. However, the court excluded from the class "independent loan officers" and "reverse home mortgage consultants" who worked from home. In addition perhaps to the California Supreme Court's action referenced above, this decision is another signal to employers to make sure they understand how properly to classify sales forces.

    State Courts

    In an interesting decision on May 8, a forum selection clause regarding wage claims was upheld by the Massachusetts Supreme Judicial Court. This opinion clears the way in Massachusetts (and perhaps elsewhere, depending upon how other courts view the reasoning of Justice Robert Cordy), when circumstances permit, for employers to utilize provisions in employment agreements that invoke jurisdictions most favorable to wage and hour law determinations.

    Showing once again how seriously the authorities and courts are taking wage and hour law violations, on May 15, the owner of a New York City restaurant and catering hall pleaded guilty to failing to pay minimum wages and retaliation. Charles Cha and his company, Millenium Dae Dong, Inc., admitted they had failed to pay the minimum wage to 20 employees at the Dae Dong restaurant and catering hall in Queens.

    On May 16, a split California appellate panel found that a car wash operating at the same location as a predecessor entity was liable for the previous occupant's obligations to pay back wages and penalties.

    In a case likely to be closely watched by wage and hour practitioners, on May 18, the Supreme Court of California allowed a petition by a group of bank employees to review a state appeals court ruling decertifying a class and overturning a $15 million dollar judgment. Bank officers for the U.S. Bank Association had sued alleging that U.S. Bank had violated California law by not paying them overtime and denying legally mandated lunch and rest breaks. U.S. Bank has defended the case, contending that the plaintiffs were subject to the outside sales exemption and that they did not share common issues either of law or fact with the class.


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