Articles Posted in Employment

Yesterday’s blog summarized the changes to the DOL’s overtime payment rules. The primary change is the increase in the salary dollar threshold for being treated as exempt from the overtime rules. Apparently, a large number of states and other organizations don’t like these changes, and have filed suit to block them. The the U.S Secretary of Labor has issued the following News Release, containing the DOL’s response to these suits:

WASHINGTONU.S. Secretary of Labor Thomas E. Perez issued the following statement on the filing of lawsuits by a group of states, the U.S. Chamber of Commerce and other organizations in the Eastern District of Texas challenging the update to the Fair Labor Standards Act’s overtime rules for white-collar, salaried workers:

 “We are confident in the legality of all aspects of our final overtime rule. It is the result of a comprehensive, inclusive rule-making process. Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics. Partisan lawsuits filed today by 21 states and the U.S. Chamber of Commerce seek to prevent the Obama administration from making sure a long day’s work is rewarded with fair pay. The overtime rule is designed to restore the intent of the Fair Labor Standards Act, the crown jewel of worker protections in the United States. The crown jewel has lost its luster over the years: in 1975, 62 percent of full time salaried workers had overtime protections based on their pay; today, just 7 percent have those protections – meaning that too few people are getting the overtime that the Fair Labor Standards Act intended. I look forward to vigorously defending our efforts to give more hardworking people a meaningful chance to get by.”

The U.S. Department of Labor (the “DOL”) has issued a “Final Rule”, which revises its overtime pay regulations. The DOL has also issued FAQs which discusses the Final Rule. Highlights of the FAQs include the following:

The Final Rule.  The Final Rule updates the regulations for determining whether white collar salaried employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime pay protections. They are exempt if they are employed in a bona fide executive, administrative or professional capacity, as those terms are defined in the Department of Labor’s regulations at 29 part 541.

Qualifying For The Exemptions.  To qualify for exemption, a white collar employee generally must:

Memorandum: According to a U.S. Department of Labor News Brief (8/13/2015), officials from the U.S. Department of Labor and the Alaska Department of Labor and Workforce Development have signed a three-year Memorandum of Understanding (the “MOU” ) intended to protect employees’ rights by preventing their misclassification as independent contractors or other non-employee statuses. Under the agreement, both agencies may share information and coordinate law enforcement.

Background: The MOU represents a new, combined federal and state effort to work together to protect the employees’ rights and level the playing field for responsible employers by reducing the practice of misclassification. Alaska is the 25th state agency to join this effort with the U.S. Labor Department. Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Idaho, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Rhode Island, Texas, Utah, Washington, Wisconsin and Wyoming agencies have signed similar agreements.

More information on misclassification and the effort are available at

In Hansler v. Lehigh Valley Hospital Network, 14-1772 (3rd Cir. 2015), Deborah Hansler (“Hansler”) had requested intermittent leave from her former employer, Lehigh Valley Health Network (“Lehigh Valley”), under the Family Medical Leave Act of 1993 (the “FMLA”). Specifically, Hansler had submitted a medical certification requesting leave for two days a week for approximately one month. As alleged in the complaint, the medical certification refers to the length of her requested leave but not the nature or duration of her condition. A few weeks later, after she took several days off work, Lehigh Valley terminated Hansler’s employment without seeking any clarification about her medical certification, as required by law. Lehigh Valley cited excessive absences and informed her that the request for leave had been denied. Hansler sued Lehigh Valley for violations of the FMLA, but the district court dismissed the complaint on the basis that the medical certification supporting Hansler’s request for leave was “invalid.”

After reviewing the case, the Third Circuit Court of Appeals (the “Court”) concluded that, in failing to afford Hansler a chance to cure any deficiencies in her medical certification, Lehigh Valley violated the FMLA. The Court said that when, as here, a medical certification submitted by an employee is “vague, ambiguous, or nonresponsive,” the employer must, under 29 C.F.R. § 825.305(c), provide the employee an opportunity to cure the deficiency within seven days. Accordingly, the Court reversed the district court’s dismissal of the case, and remanded the case for further proceedings.

In Bonkowski v. Oberg Industries, Inc., No. 14-1239 (3rd Cir. 2015), the plaintiff, whose employment had been terminated, was attempting to invoke the protections of the Family and Medical Leave Act (the “FMLA”). The district court had ruled that the plaintiff was NOT entitled to this protection, because he did not show that he had a “serious health condition” under 29 U.S.C. § 2611(11)(A), i.e., “an illness, injury, impairment, or physical condition that involves (A) inpatient care in a hospital, hospice, or residential medical care facility,” and therefore was not entitled to leave (or protection) under the FMLA. The plaintiff appeals this ruling.

The crux of this case is an interpretation of the regulation at 29 C.F.R. § 825.114, which defines the terms “inpatient care”-for purposes of determining if a serious health condition exists- as “an overnight stay in a hospital, hospice, or residential medical facility, including any period of incapacity as defined in 29 C.F.R. § 825.113(b), or any subsequent treatment in connection with such inpatient care.” The Third Circuit Court of Appeals (the “Court”) concluded that “an overnight stay” under this regulation means a stay in a hospital, hospice, or residential medical care facility for a substantial period of time from one calendar day to the next calendar day as measured by the individual’s time of admission and his or her time of discharge. The Court said that, since the plaintiff was admitted and discharged on the same calendar day, he did not have an overnight stay, and thus did not have a serious health condition. Accordingly, the Court affirmed the district court’s ruling.

In Employ Concerned Home Care Providers, Inc. v. Cuomo, No. 13-3790-cv (Second Cir.2015), the Second Circuit Court of Appeals (the “Court”) faced the following matter. A section of the New York Public Health Law known as the “Wage Parity Law” sets the minimum amount of total compensation that employers must pay home care aides in order to receive Medicaid reimbursements for reimbursable care provided in New York City and Westchester, Suffolk, and Nassau Counties (the “surrounding Counties”). N.Y. Pub. Health Law § 3614-c. The questions presented on to the Court on appeal are whether the Wage Parity Law is preempted by the National Labor Relations Act (“NLRA”), or the Employee Retirement Income Security Act of 1974 (“ERISA”), or is unconstitutional under the Fourteenth Amendment’s Due Process and Equal Protection Clauses. The Court ruled that the Wage Parity Law is neither preempted nor unconstitutional.

In Tramp v. Associated Underwriters, Inc., No. 13-2546 (8th Cir. 2014), Marjorie Tramp appeals from the district court’s grant of summary judgment in favor of her former employer Associated Underwriters, Inc., on Tramp’s claims of, among other things, wrongful termination on the basis of age in violation of the Age Discrimination in Employment Act (the “ADEA”). Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”), overturned the district court’s judgment, ruled that Tramp has presented a submissible case of age discrimination for determination by a fact-finder, and remanded the case back to the district court on that basis.

Why did the Court so rule on the ADEA issue? The Court noted that Tramp claims that Associated Underwriters terminated her because her age affected its employee health insurance costs. The Court said that, to prevail on a claim under the ADEA, Tramp must prove by a preponderance of the evidence (which may be direct or circumstantial) that age was the `but-for’ cause of the challenged employer decision. To so prove this point, Tramp must first establish a four-part prima facie case of age discrimination by showing that: (1) she is over 40 years old, (2) she met the applicable job qualifications, (3) she suffered an adverse employment action, and (4) there is some additional evidence that age was a factor in the employer’s termination decision. Once Tramp establishes a prima facie case, the burden of production shifts to the employer to articulate a legitimate, nondiscriminatory reason for its adverse employment action. If the employer does so, Tramp must show that the employer’s proffered reason was pretext for discrimination. At all times, Tramp retains the burden of persuasion to prove that age was the `but-for’ cause of the termination.

As to the prima facie case, the Court said that Tramp has established elements (1) to (3) and that only element (4) is in question. Here, Associated Underwriters’ may have terminated Tramp to reduce health care costs. In turn, termination to effect such reduction may have been a proxy for termination due to age. That is for the finder of fact to determine. Thus, the Court concluded that Tramp made out her prima facie case, and remanding the case back to the district court is appropriate.

According to a News Release (11/12/2014), officials from the U.S. Department of Labor and the New Hampshire Department of Labor have signed amemorandum of understanding, with the goal of protecting the rights of employees by preventing their misclassification as something other than employees, such as independent contractors or other nonemployee statuses. The News Release states the following:

Under this agreement, both agencies will share information and coordinate law enforcement. The memorandum of understanding represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The New Hampshire Department of Labor is the latest state agency to partner with the Labor Department.

Business models that attempt to change or obscure the employment relationship through the use of independent contractors may not be used to evade compliance with federal labor law. Although legitimate independent contractors are an important part of our economy, the misclassification of employees presents a serious problem, as these employees often are denied access to critical benefits and protections — such as family and medical leave, overtime compensation, minimum wage pay, Unemployment Insurance, personal protective equipment and retirement benefits — to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law.

In Litz v. The Saint Consulting Group, Inc., No. 13-2437 (1st Cir. 2014), the plaintiffs Crystal Litz and Amanda Payne (“plaintiffs”) claim unpaid overtime wages for their work as project managers for The Saint Consulting Group, Inc. (“SaintConsulting”). The district court concluded that plaintiffs were “highly compensated employees” and thus exempt from the overtime pay protections of the Fair Labor Standards Act (“FLSA”). 29 U.S.C. § 213(a)(1); 29 C.F.R. § 541.601. The plaintiffs appeal.

After analyzing the case, the First Circuit Court of Appeals (the “Court”) concluded that the district court was correct and affirmed the decision. Why? The Court noted that the FLSA requires employers to pay nonexempt employees at a higher rate for hours worked beyond 40 hours in a week. 29 U.S.C. § 207(a)(1). The FLSA exempts from its overtime protection any employee employed in a bona fide executive, administrative, or professional capacity. Id. § 213(a)(1). The FLSA implementing regulations further provide that this exemption applies to “highly compensated employees” who (1) customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee; (2) receive at least $100,000 in total annual compensation; and (3) receive at least $455 per week paid on a salary or fee basis. 29 C.F.R. § 541.601(a), (b)(1). Saint Consulting argues, and the district court agreed, that the plaintiffs satisfied these three requirements. The plaintiffs concede that they satisfied the duties requirement and earned well over $100,000 annually during the relevant time period, but they argue that they were not paid any amount “on a salary … basis” due to a $1,000 stipend paid each week that their hours were below a certain level.

The Court continued by saying that the stipend was paid on a “salary basis” if it was (1) a predetermined amount, (2) constituting all or part of the employee’s compensation, and (3) not subject to reduction because of variation’s in the quality or quantity of the work performed. Id. § 541.602(a). The facts establish that these conditions are met, and the Court concluded that the plaintiffs are highly compensated employees, not eligible for overtime.

In Alexander v. Avera St. Luke’s Hospital, No. 13-2592, (8th Cir. 2014), pathologist Larry Alexander (“Alexander”) suffered a heart attack in March 2008, underwent a heart transplant in May 2009, and was hospitalized for bipolar disorder in October 2010. In August 2011, Avera St. Luke’s, a non-profit corporation operating St.Luke’s Hospital in Aberdeen, South Dakota (“Avera”), terminated its December 2008 Pathology Services Agreement with Dr. Alexander, invoking the provision that either party may terminate the Agreement with or without cause on ninety days prior written notice. Alexander brought this action against Avera, alleging violations of the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”), the Family and Medical Leave Act (“FMLA”), and the South Dakota Human Relations Act (“SDHRA”). The district court granted Avera’s motion for summary judgment, concluding that each of these statutory claims failed because undisputed material facts demonstrated that Alexander was an independent contractor rather than an Avera employee. Alexander appeals.

After analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) agreed that Alexander was an independent contractor when performing under the Pathology Services Agreement, and affirmed the district court’s holding. Why? The Court said that Alexander appeals the dismissal of his statutory claims that Avera violated his rights under the ADA, ADEA, FMLA, and SDHRA. Each of these statutes limits its protections to “employees.” Independent contractors are not covered. Although the analysis differs somewhat under each statute, based generally on the test in Nationwide Mut. Ins. v. Darden (Supreme Court 1992), the Court concluded that Alexander is an independent contractor, because:

— Avera had no right to control the specific manner in which Alexander rendered pathology services;