Hunton Employment & Labor Perspectives

In 2017, the U.S. Supreme Court issued its ruling in  Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (“BMS”), holding the Fourteenth Amendment prevents a state court from adjudicating non-resident plaintiffs’ state-law claims. Since then, various federal courts have considered whether that ruling extends to prevent a federal court from adjudicating claims brought under the federal Fair Labor Standards Act (“FLSA”) by individuals who live and work outside the court’s jurisdiction—and courts have come to vastly different conclusions.

On September 27, 2024, the United States Court of Appeals for the First Circuit (the “First Circuit”) entered judgment in favor of 7-Eleven, Inc. (“7-Eleven”) in Patel v. 7-Eleven, Inc., putting to rest a class action lawsuit 7-Eleven has been defending for more than seven years regarding allegations that its franchisees were actually employees of 7-Eleven, based on the application of the Massachusetts independent contractor statute.

On August 23, 2024, the U.S. Court of Appeals for the Fifth Circuit struck down the Department of Labor’s (“DOL”) tip credit rule, known as the “80-20-30” rule, which limits the ability of employers to satisfy a portion of tipped employees’ wages with earned tips.

The EEOC is asking the Ninth Circuit to clarify the U.S. Supreme Court’s new standard for determining the type of harm that constitutes an adverse job action in discrimination cases and to apply that standard or remand the case at issue so the lower court can apply the new standard.

On April 23, 2024, the Federal Trade Commission (“FTC”) approved a final rule banning most non-compete agreements between employers and their workers (the “Final Rule”). However, in the afternoon of Tuesday, August 20, 2024, Judge Ada E. Brown of the United States District Court for the Northern District of Texas, followed her July preliminary injunction against the rule with a substantive ruling granting summary judgment in favor of the plaintiffs challenging the Final Rule and against the FTC (“Memorandum Opinion and Order”), explaining that “the Court concludes the text and the structure of the FTC Act reveal the FTC lacks substantive rulemaking authority with respect to unfair methods of competition, under Section 6(g). See generally 15 U.S.C. § 46(g); 15 U.S.C. § 57a. Thus, when considering the text, Section 6(g) specifically, the Court concludes the Commission has exceeded its statutory authority in promulgating the Non-Compete [Final] Rule.”  Memorandum Opinion and Order at 22. 

In an era where pay equity and transparency are becoming increasingly important, Massachusetts has taken a significant step with the enactment of House Bill 4890 (HB 4890), the Commonwealth’s new pay transparency law, which expands its previously enacted Massachusetts Equal Pay Act.

In an unusual ruling, Pennsylvania federal judge Michael M. Baylson (i) invoked a court’s inherent powers to manage its docket in dismissing with prejudice a long-running collective action lawsuit against Uber Technologies, Inc. (“Uber”) but also (ii) awarded—after a second hung jury—victory to Uber on the merits by granting its Rule 50(b) motion for judgement as a matter of law.

Many employers today feel pressured to take formal stances on political topics which could impinge on protected categories, such as student protests, abortion access, and Black Lives Matter. Even employers that decline these invitations must effectively manage conflicts between employees over topics such as Israel and Palestine, Russia and Ukraine, or gender-based, religious, or racial implications of opposing political positions, particularly those tied to the upcoming election.

Last week, New York’s Governor signed a bill into law that effectively prohibits employers from accessing employees’ or job applicants’ personal social media accounts. The law goes into effect on March 12, 2024.

The legal path between employee arbitration agreements under the Federal Arbitration Act (“FAA”) and representative claims under the California Private Attorney General Act (“PAGA”) has been anything but smooth. A new (albeit unpublished and uncitable) case, Piran v. Yamaha Motor Corp., et al., No. G062198, 2024 WL 484845 (Cal. Ct. App. Feb. 8, 2024)(unpub.) (“Yamaha”), helps to illustrate the challenges and unanswered questions lingering in the wake of this rapidly-developing area of law.

Tyson Foods, Inc. (“Tyson”) is no stranger to religious accommodation lawsuits over the impact of its COVID-19 vaccine mandate given its continued efforts to operate through the height of the pandemic in 2021—but the battle just heated up with a proposed class action complaint filed in the Eastern District of Arkansas.

Recently, in Restaurant Law Center, et al. v. U.S. Dep’t of Labor, the U.S. District Court for the Western District of Texas affirmed the validity of a new Department of Labor (DOL) rule, known as the “80-20-30” or “dual jobs” rule, which limits the ability of employers to satisfy a portion of tipped employees’ wages with earned tips.

In Harris et. al. v. Medical Transportation Management, Inc. et. al., the D.C. Circuit Court of Appeals held that a putative class cannot be certified as an “issue” class under Rule 23(c)(4) without also satisfying the requirements in Rule 23(a) and (b).  This ruling is important because it prohibits putative classes from using the “issue” class mechanism of Rule 23(c)(4) to skirt the important procedural requirements in Rule 23(a) and (b) that are meant to protect both the litigants and absent parties.  The court also encouraged the use of the partial summary judgment mechanism, rather than Rule 23(c)(4), to resolve discrete legal issues common to many class members. 

Pending legislation in New York (Senate Bill S3100A/Assembly Bill A1278B) will result in the sharp curtailment of post-employment non-competes if passed into law.  This development is concerning to many employers operating in New York or employing individuals currently living there, but for the moment, it is far from clear whether the current (or any) form of the bill may be passed into law.

In a recent decision in Perez v. Express Scripts, Inc., the U.S. District Court for the District of New Jersey determined that plaintiff and a conditionally certified class of 200 members in a misclassification class action were exempt given that they were highly compensated.

In a recent ruling, the U.S. District Court for the Northern District of Illinois determined that a bartender’s evidence – affidavits from herself and her supervisor – were insufficient to obtain conditional certification on her Fair Labor Standards Act (“FLSA”) claim. Plaintiff Alexa Roberts brought suit against One Off Hospitality Group and several of its restaurants and management personnel (“Defendants”) alleging that she was deprived of wages and overtime compensation in violation of the FLSA, the Illinois Minimum Wage Law (“IMWL”), and the Illinois Wage Payment and Collection Act (“IWPCA”). Plaintiff alleged that she was required to clock in and out at the times of her scheduled shift even if she worked in excess of those times so that Defendants would not have to pay overtime. She further alleged that Defendants were aware that other employees were also working off the clock.

Court watchers following the ripple effects of groundbreaking wage and hour opinion Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021) (“Swales”) may have gained their first insight into the Supreme Court’s thought process following Chief Justice John Robert’s refusal to pause a conditional collective action certification in Maximus Inc. v. Thomas, et al., No. 22A164, currently pending in the Eastern District of Virginia and following this decision and a failed appeal from the Fourth Circuit.

Just days ago, the highest court in Massachusetts—the Supreme Judicial Court (“SJC”)— decided whether former food delivery drivers for GrubHub could escape their arbitration agreements and bring a wage and hour class action lawsuit in court. In excellent news for employers operating in the intrastate delivery sector, the SJC held that they could not. Archer v. GrubHub, Inc., SJC-13228. 2022 WL 2964639 (July 27, 2022) (“GrubHub II”).

Our prior post discussed how Democrats in the House of Representatives sought to amend the Federal Labor Standards Act (FLSA) as part of new proposed legislation called the “Wage Theft Prevention and Wage Recovery Act”. It concluded that the legislation, if enacted, would increase both the frequency and severity of not only FLSA collective actions but also of investigations and enforcement actions by the Department of Labor’s Wage and Hour Division.

Earlier this month, Democrats in the House of Representatives introduced the “Wage Theft Prevention and Wage Recovery Act” (“Act”). This proposed legislation seeks to amend the Federal Labor Standards Act (“FLSA”) in several key ways.

First, the Act would require all employers to provide regular pay stubs and initial salary disclosures.

Second, the Act would change wage recovery by requiring payment at an employee’s agreed-upon wage rate, rather than at the minimum wage or minimum overtime wage rates, which the FLSA has never done and has traditionally been within ...

The Massachusetts Personnel Records Law, M.G.L. chapter 149, § 52C gives employees the right to submit written rebuttals to any negative information contained in a personnel file if the employee truly disagrees with the content of the information. The written rebuttal then becomes a permanent feature of the employee’s personnel file. 

On December 13, 2021, the Massachusetts Supreme Judicial Court (“SJC”) issued its long-awaited decision determining that the Massachusetts Independent Contractor Statute, G.L. c. 149, § 148B (“Independent Contractor Statute”), which establishes the three-pronged “ABC” test used to classify workers as independent contractors or employees – and provides for a rebuttable presumption that workers are employees unless the purported employer proves otherwise – is not the applicable standard to determine whether an entity is a joint employer.

A critical ruling in the world of franchising, in Haitayan v. 7-Eleven, Inc., 2021 WL 4078727 (C.D. Cal. Sept. 8, 2021), the U.S. District Court for the Central District of California applied the so-called Borello test to find that franchisees were independent contractors, instead of employees, for purposes of their claims for unpaid business expense reimbursements under California’s Labor Code section 2802.

On September 8, 2021, the House Education and Labor Committee issued proposed legislation in connection with the House’s new spending bill. Among other pro-union proposals issued in connection with the Protecting the Right to Organize (PRO) Act, the proposed legislation seeks to amend the National Labor Relations Act (NLRA) by banning class and collective action waivers.

The proposed legislation says that no employer shall “enter into or attempt to enforce” any express or implied agreement not to “pursue, bring, join, litigate, or support any joint, class, or collective claim” arising from the employment relationship.   This is unwelcome news to employers who rely on class and collective action waivers in their arbitration agreements.

Use of employee biometric data – including fingerprints, eye scans, voiceprints, and facial scans – continues to be a popular, yet legally risky, proposition for employers. Several states and municipalities have laws that specifically govern the use of biometric data, the highest profile of which is the Illinois Biometric Information Privacy Act (BIPA).

On June 10, 2021, fifteen months into the COVID-19 pandemic, the United States Labor Department’s Occupational Safety and Health Administration (“OSHA”) has issued its first ‘emergency temporary standard’ (“ETS”) governing the impact of COVID-19 on health care workers.

The ETS broadly requires healthcare employers to conduct an internal safety assessment and develop a safety plan, which must be in writing for all employers with more than 10 employees. The ETS further delineates requirements relating to patient screening and management, health precautions, masks and PPE,  aerosol-generating procedures, physical distancing, physical barriers, cleaning and disinfection, ventilation, health screening, vaccination, employee training, anti-retaliation, record-keeping, reporting occurrences of COVID-19 transmission, and paying employees for periods of quarantine. Consistent with recent CDC guidance, the ETS also contains carve outs on employee mask-wearing requirements where employees are all vaccinated or where employees are given reasonable accommodations exempting them from mask-wearing and/or vaccination requirements.

In an April 28, 2021 decision, the Ninth Circuit determined that the application of California’s ABC test (also known as AB-5) to motor carriers is not preempted by the Federal Aviation Administration Authorization Act of 1994 (“F4A”). The ABC test is a judicially-created independent contractor test that was ultimately codified via AB-5. For a more in-depth discussion of AB 5, visit our previous blog post here.

Last month, the State of New York passed legislation which permits New York employees up to four hours of paid leave to receive a COVID-19 vaccination. While this new legislation became effective immediately upon passing on March 12, 2021, employers were left with many questions regarding their obligations under the law. In an effort to resolve some of these questions, the New York Department of Labor issued guidance in the form of FAQs to provide clarification for employers.

While COVID-19 may have hit the business community like a hurricane, whether the pandemic, in fact, qualifies for a natural disaster exception under the federal law requiring businesses to warn employees of impending layoffs, remains an open question.

This February, a federal judge paved the way for the Eleventh Circuit to weigh in on whether a class action can proceed against an employer who was forced to lay off employees due to COVID-19.  That case, Benson v. Enter. Leasing Co. of Orlando, LLC, is one of the first to look at the application of pandemic-related layoffs to the Worker Adjustment Retraining Notification Act of 1988, 29 U.S.C. § 2100 et seq. (“WARN Act”). Underscoring the case’s importance to the business community, the U.S. Chamber of Commerce has just filed an amicus or “friend of the court” brief asking the Eleventh Circuit to take up the case and provide “much-needed guidance” to other courts across the country.

Last month, the Seventh Circuit Court of Appeals rejected a proposed class of thirty-seven employees for failure to satisfy Federal Rule of Civil Procedure 23’s numerosity requirement.

“Much ink has been spilled” over the requirements of Rule 23, the Seventh Circuit noted.  But only a small share of those cases concern the numerosity requirement.  Most opinions deal with commonality or typicality.  Recognizing this paucity, the court took occasion to outline the parameters of the numerosity factor. The resulting opinion is a useful guide to parties engaged in smaller class actions or class actions where the commonality or typicality requirements may only apply to a smaller group of workers.

For over 30 years, most district courts throughout the country have used a two-step conditional certification process to govern certification of collective actions under the Fair Labor Standards Act (FLSA).  But in its recent and game-changing opinion, Swales v. KLLM Transport Services, LLC, the Fifth Circuit rejected that two-step process and laid out a stricter framework for FLSA collective actions.

Earlier this month, the EEOC launched EEOC Explore, “an interactive data query and mapping tool” that gives users access to aggregate data on more than 73,000 employers and 56 million employees across the United States.  According to the agency, EEOC Explore “enables stakeholders to explore and compare data trends across a number of categories, including location, sex, race and ethnicity, and industry sector without the need for experience in computer programming or statistical analysis.”

California is well known for its broad restrictions relating to non-competition clauses applicable to workers. After a recent decision by the Federal Circuit, such notoriety may extend to the patent realm. Employers should beware to not fall into this employment agreement trap.

In what it characterized as an issue not previously addressed by California’s appellate courts, in Whitewater West Industries v. Alleshouse, No. 2019-1852 (Fed. Cir. Nov. 19, 2020), the Court of Appeals for the Federal Circuit held that that California state law not only restricts non-competition ...

An Alabama federal judge granted AutoZone's request to dismiss nearly 500 current and former store managers from a nationwide collective action that the national auto-parts chain had misclassified them as exempt under the Fair Labor Standards Act (“FLSA”) and denied them overtime, holding those plaintiffs had missed the three-year statute of limitations and that plaintiffs had failed to establish equitable tolling should apply to save their claims.

On September 10, 2020, the United States District Court for the District of Massachusetts issued a Memorandum and Order granting summary judgment in favor of a franchisor in response to claims by a purported class of franchisees that they were not truly independent contractors, but employees of the franchisor.

The main issue addressed in the case was whether specific federal legal requirements that are imposed upon franchisors trump the general Massachusetts independent contractor classification statute. The federal court reasoned that applying the Massachusetts independent contractor classification statute to the franchise business model would render franchisors regulated by the Federal Trade Commission (“FTC”) criminally liable under state law for employee misclassification simply by virtue of their compliance with the FTC’s requirements.

This month, the Southern District of Florida declined to certify a nationwide class of Denny’s servers alleging the restaurant chain had violated the minimum wage and tip credit provisions of the Fair Labor Standards Act (FLSA) on the basis that the named plaintiff failed to provide enough evidence that the servers were similarly situated.

Plaintiff Lindsay Rafferty worked as a server at a Denny’s restaurant in Akron, Ohio from February 2012 through October 2018.  On November 13, 2019, Rafferty filed a lawsuit against Denny’s alleging that the restaurant paid its employee servers a sub-minimum hour wage under the tip credit provisions of the FLSA and that Denny’s required its servers to perform non-tipped “sidework.”

The Ninth Circuit Court of Appeals recently clarified that a named plaintiff gives up his or her right to represent a class if, in an individual settlement, he or she does not carve out from the settlement a concrete financial interest in the putative class action.  In so holding, the court explained that it was not enough for a plaintiff to generically carve out “class claims,” without identifying a more specific financial stake that would remain in the outcome of the class claims.

On May 19, 2020, the US Department of Labor (“DOL”) issued its final rule likely expanding the FLSA’s Section 7(i) overtime exemption for commission-based workers in retail and service industries by withdrawing the long-standing, historical list of businesses that the DOL identified as falling within or outside of what it deemed to be a retail or service establishment.

A recent Fifth Circuit opinion held that a company’s arbitration agreement did not prevent employees from pursuing their claims as a collective arbitration, rather than individual claims.  As class claims related to COVID-19 begin to surge, the opinion provides occasion for companies to review their arbitration agreements to ensure that the companies’ aims are clearly drafted.

 COVID-19

The harm COVID-19 has wrecked on workplaces is no secret.  As employees and employers grapple with remote work, pay reductions, and record unemployment, it is reasonable to expect a surge of employment litigation in the months ahead.

On April 23, 2020, the EEOC updated its Technical Assistance Questions and Answers, “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” which Hunton previously posted about here, to address questions that many employers are struggling with related to employee COVID-19 testing.  The EEOC’s new guidance confirms that employers are authorized to administer COVID-19 tests before allowing employees to enter the workplace, and that doing so does not violate the Americans with Disabilities Act (ADA).

On February 26, 2020, the National Labor Relations Board (NLRB) finalized its rule governing joint employer status under the National Labor Relations Act.

The final rule generally restores the “direct and immediate control” standard that the NLRB applied for decades prior to the 2015 Browning-Ferris decision, but provides additional guidance.

With the age of artificial intelligence (AI) unfolding, products aimed at automating the recruiting and hiring process are hitting the market with increasing frequency.

Companies have been utilizing AI for tasks such as screening resumes, and even interviewing candidates and assessing whether they will be successful employees.  These automated tools range from algorithms that “weed through” resumes to personality assessments and biometric analyses that employ AI to analyze a candidate’s facial expressions, body language, voices, and inflections in video interviews.

Last week, a federal judge in the Eastern District of Michigan granted Domino’s Pizza, Inc.’s motion to dismiss, holding that workers operating under the Domino’s brand must arbitrate their claims that the pizza chain made its franchises promise not to hire each other's employees, then misled the public to believe no such agreement existed.

In a decision first discussed on the Hunton Insurance Recovery Blog on September 6, 2019,  a California Appellate Court held that underwriters at Lloyd’s of London must defend the owner/operator of hundreds of Pizza Hut and Wing Street restaurants in a putative employee class action accusing the company of labor law violations, finding that an employment practices liability insurance (EPLI) policy’s “wage and hour” exclusion must be construed narrowly to bar coverage only for claims related to “laws concerning duration worked and/or remuneration received in exchange for work.” In doing so, the court made clear that “wage and hour” exclusions do not preclude coverage for claims that go beyond the employee’s actual remuneration received in exchange for work.

Earlier today, the United States Department of Labor announced a long-awaited final rule to take effect on January 1, 2020 updating the earnings threshold to $35,568 necessary for employees to qualify for the Fair Labor Standards Act’s (FLSA) “white collar” exemptions.   The DOL estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of this increase in the salary basis.

Earlier this year, a federal court in Illinois decertified a small class of Physicians who alleged gender-based pay discrimination under the Equal Pay Act (“EPA”).  Sajida Ahad, MD v. Board of Trustees of Southern Illinois University, No. 15-cv-3308 (C.D. Ill. Mar. 29, 2019).  Although not a groundbreaking appellate court decision, the opinion does provide a roadmap for employers facing EPA collective actions, which may gain traction in the wake of increasing media attention on pay disparities.

In a case of first impression, the Third Circuit rejected the view of the United States Department of Labor, ruling that incentive payments from third parties are not necessarily included in the calculation of an employee’s overtime rate.

In Secretary United States Department of Labor v. Bristol Excavating, Inc., No. 17-3663, 2019 WL 3926937 (3d Cir. Aug. 20, 2019) (“Bristol”), the Court of Appeals overturned a District Court’s order holding that all incentive payments made by third parties must be included in an employee’s overtime rate under the Federal Labor Standards Act (“FLSA”). The unanimous Third Circuit panel held that the understanding of the employer and employee determines whether third-party payments should be included in the overtime rate.

In a statement issued last week, Massachusetts Governor Charlie Baker, along with state house and senate leadership, announced that lawmakers had agreed to implement a three-month delay to the Massachusetts Paid Family and Medical Leave (PFML) law, which Hunton Andrews Kurth, LLP previously reported about here. In the joint statement, the leaders explained:

To ensure that businesses have adequate time to implement the state’s Paid Family and Medical Leave program, the House, Senate, and Administration have agreed to adopt a three-month delay to the start of the required contributions to the program. We will also adopt technical changes to clarify program design. We look forward to the successful implementation of this program this fall.

Paid Family and Medical Leave, or PFML, is fast approaching and Massachusetts employers need to begin preparing for the upcoming July 1, 2019 effective date.

Not only do employers need to understand their obligations, but there are affirmative actions they must take now – which is well in advance of the January 1, 2021 commencement of the benefits taking effect.

Massachusetts’ highest court, The Supreme Judicial Court (“SJC”), recently issued its long awaited decision in Sullivan v. Sleepy’s LLC, SJC-12542, in which the SJC responded to certified questions of first impression from the United States District Court for the District of Massachusetts. The case is particularly important for businesses which pay employees through commissions or draws (i.e., advances on commissions), particularly in the retail context where the ruling departs considerably from federal law.

Earlier this month, the Massachusetts Supreme Judicial Court (“SJC”) settled a long-standing debate amongst opposing parties in wage-hour class actions regarding the standard for class certification. The SJC’s decision in Gammella v. P.F. Chang’s China Bistro, Inc., No. SJC-12604, 2019 WL 1575527, definitively establishes that Rule 23 of the Massachusetts Rules of Civil Procedure – viewed as a stricter standard for certification and the same civil standard applicable to most other Massachusetts state court class actions – is the applicable standard for determining class certification in wage and hour cases.   The SJC also weighed in on satisfaction of the “numerosity” requirement for certification under Rule 23 and held that a rejected offer of judgment to a named plaintiff that covers all potential damages does not cut off that plaintiff’s claims.

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