Hunton Employment & Labor Perspectives

The National Labor Relations Board (the “NLRB”) and McDonald’s Corp. have reached a settlement agreement in the long-running employment retaliation case brought against McDonald’s that hinges on whether McDonald's Corp., as a franchisor, has enough control over its franchisees to be considered a "joint employer" of the franchisees’ employees.  The case stems from allegations that McDonald’s unlawfully retaliated against franchisee workers who joined the “Fight for $15” movement.  In bringing this case against McDonald’s, the NLRB has argued that even having only “indirect control” over a worker is enough for a franchisor like McDonald’s to be held liable for the employment practices of its franchisees.   The NLRB’s case against McDonald’s was bolstered by the Board’s 2015 Browning-Ferris decision, which departed from decades of legal precedent in holding that entities who merely possessed—as opposed to directly and immediately exercised—control over workers could be deemed joint employers for purposes of assessing liability under the National Labor Relations Act.

In June, new laws will go into effect that restrict employers’ ability to request and use criminal history information about applicants in three jurisdictions: Kansas City, Missouri; the State of Washington; and the city of Spokane, Washington.

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The practice of “tip-pooling,” which refers to the sharing of tips between “front-of-house” staff (servers, waiters, bartenders) and “back-of-house” staff (chefs and dishwashers), has been in the news recently as the Trump Department of Labor (“DOL”) seeks to roll back a 2011 Obama-era rule limiting the practice under the Fair Labor Standards Act (“FLSA”).

Say an employee slips $20 from the register and even admits to it when you show the camera footage.  Or, more innocently, say an employee is overpaid $20 entirely by accident.  If the employee refuses to give it back, should you deduct the $20 from the employee’s paycheck?

It depends.  Here are four questions to ask yourself. 

Under a new DOL pilot program, employers can self-report wage violations and potentially avoid costly litigation.

Last week, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) launched a six-month pilot program to resolve FLSA violations.  Under the Payroll Audit Independent Determination (PAID) program, employers may self-report potential overtime or minimum wage violations to the WHD, which will then resolve the matter by supervising payments to employees if the employees accept the settlement.  Importantly, the WHD will not impose penalties or liquidated damages on employers that participate in the program and proactively work with the WHD to resolve the compensation errors.  Further, if an employee accepts a supervised settlement through PAID, s/he waives his or her right to file an action to recover damages and fees for the violations and time period identified by the employer.  To participate in the PAID program, an employer must identify: (1) the wage violation(s); (2) the impacted employee(s); (3) the time period(s) in which the violation(s) occurred; and (4) the amount of back wages owed to the impacted employee(s).  However, employers may not participate if they are in litigation or under investigation by the WHD for the practices at issue, or to repeatedly resolve the same potential violations.

The California Supreme Court issued a decision Monday in a case that is sure to cause headaches for employers when compensating employees through flat sum bonuses.  In Alvarado v. Dart Container Corporation of California (S232607) the Court held that for purposes of calculating the regular rate, a flat sum bonus is to be allocated only to the nonovertime hours worked. This holding departs from the calculation methods broadly considered compliant outside of California under the Fair Labor Standards Act (“FLSA”) and regulations issued by the U.S. Department of Labor.

Recently the National Labor Relations Board invited interested parties and amici to submit briefs in Velox Express, Inc. (15-CA-184006) to address under what circumstances, if any, the Board should deem an employer’s misclassifying statutory employees as independent contractors constitutes a violation of Section 8(a)(1) of the National Labor Relations Act (“the Act”).  Briefs from parties and interested amici must be submitted on or before April 16, 2018.

The Sixth Circuit recently affirmed a district court’s summary judgment decision finding that an employer, Plastipak Holdings, Inc., Plastipak Packaging, Inc., Plastipak Technologies, LLC, Plastipak, and William C. Young (collectively, “Plastipak”) properly had paid employees using the “fluctuating workweek” method and dismissing plaintiffs’ claims for underpayment of wages under the Fair Labor Standards Act (“FLSA”).

The National Labor Relations Board continues to undo its actions overruling the joint employer test of Browning-Ferris Industries, 362 NLRB No. 186 (2015).  Earlier this week the Board vacated its decision in Hy-Brand Industries, the case which had overruled Browning-Ferris.

Shortly after the original Hy-Brand decision, the Board had asked the U.S. Court of Appeals for the District of Columbia Circuit to remand the Browning-Ferris case to the Board.  At the time, the Browning-Ferris case was pending before the court of appeals on the Board’s petition for enforcement and Browning-Ferris’s petition for review, and had been fully briefed and argued.