3d people - men, person and a question mark. Businessman.
3d people – men, person and a question mark. Businessman.

On January 20, 2016, the United States Department of Labor issued an administrative interpretation concerning “joint employees” and the Fair Labor Standards Act.  The purpose of that interpretation is to discuss situations where employers attempt to avoid their obligations to pay overtime.  It can be found here:  Joint Employment

First, the Department of Labor discussed “horizontal” employment relationships.  Those relationships occur when an employee works for two (or more) separate, but related, companies.  For example, an employee may work for Joe’s House of Burgers for five hours, and then walk next door to Joe’s House of Chicken to work an additional five hours.  If  Joe owns and operates both companies, Joe might try to argue that his employee only accrues 25 hours per week at each business — thus avoiding overtime.  The Department of Labor’s interpretation will look more carefully at the relationship to see if Joe is actually employing individuals for 50 hours per week.

The Department of Labor also discussed “vertical” relationships.  This scenario involves situations where one company’s employee works in a location owned by a second company.  For example, the Department of Labor noted that employees of temporary staffing agencies may also be employees of the businesses where they are employed.  While the Department of labor noted many factors for resolving this issue, the key element will be control of the employee – an issue which I also discussed here:  How “Independent” Are Your Independent Contractors?

If you are looking for ways to avoid paying overtime, proceed cautiously and talk with your attorney.


Smart Phone
Clock and mobile phone on a wooden table. Old wood texture. Deadline or time concept with technology. Close up with copy space. There is also a green plant on the table.

Some employers issue smartphones to their employees for use on the job.  There are at least two reasons that employers should proceed cautiously before giving employees a smartphone.

First, a smartphone increases the risks of accidents of all kinds.  Employees can trip and fall while checking e-mail.  Or worse, they can have a car accident while texting and driving.  Employers issuing smartphones should develop policies strictly limiting the use of those devices.  More importantly, employers must follow those policies and discipline employees who fail to follow them.

Second, a recent decision from Chicago indicates that employees may be entitled to overtime for off-duty time spent working on a smartphone. Allen v. City of Chicago, 2015 WL 84939966 (N.D. Ill. Dec. 10, 2015).  In Allen, the judge found that the employer was not required to pay overtime; but the judge also set up a framework under which smartphone use could be compensable.  If off-duty e-mail is necessarily and primarily a part of the job and if the employer knows, or has reason to know, about the smartphone use, the employee may be entitled to overtime.

Once again, the lesson of Allen is that employers should have strict policies on smartphone use and enforce those policies.

Hungry for Pay —  The FLSA and Lunch Breaks



Yellow sticky note on a laptop keyboard with 'Gone for Lunch' on it.
Yellow sticky note on a laptop keyboard with ‘Gone for Lunch’ on it.

Occasionally, a client will ask if they are required to pay employees for lunch breaks.  The answer is:  “It depends.”  Employers are not required to provide employees with any kind of breaks, including “lunch breaks,” “rest breaks” or “smoke breaks.” Nevertheless, if an employer provides breaks, the Fair Labor Standards Act generally requires that employees receive pay for “short breaks” of 20 minutes or less.  The FLSA does not require pay for “bona fide lunch breaks.”

So, what is a “bona fide lunch break”?  In the Eleventh Circuit (which reviews cases from Alabama), a bona fide lunch break is one where employees are completely relieved from work for the purpose of eating a regularly scheduled meal.  For some employers, this can be a difficult standard.

A 2014 case from Judge Sharon Blackburn demonstrates the burdens placed on employers.  See Ledbetter v. Mercedes Benz U.S. International, Inc., No. 7:10-CV-0467-SLB, 2014 WL 1247988 (N.D. Ala. Mar. 24, 2014).  In that case, workers at the Mercedes Benz plant were scheduled to have an uninterrupted 45-minute lunch break.  Nevertheless, the evidence showed that they were “frequently” recalled during their meal period to perform their customary duties.  Judge Blackburn refused to dismiss the case against Mercedes Benz and found that employees “were not completely relieved of their work duties and their meal breaks, even the rare, uninterrupted meal break, are compensable.”

In short, if an employer “frequently” makes an employee work during lunch breaks, then it is possible that the employee is entitled to pay for all lunch breaks — even uninterrupted lunch breaks.

Federal Contractor Minimum Wage:  Complying With President Obama’s Executive Order

A gavel and a name plate with the engraving Minimum Wage
A gavel and a name plate with the engraving Minimum Wage

Effective January 1, 2016, many federal contractors are required to pay their employees a minimum wage of $10.15 per hour.  This requirement applies to:  (1) Contracts/replacement contracts that result from solicitations issued on or after January 1, 2015; (2) Modifications of existing contracts which have more than 6 months remaining on their term; and, (3) Service Contract Act and Davis Bacon Act Contracts.  The minimum wage requirements are the result of President Obama’s Executive Order 13658.

Importantly, the Executive Order also requires notification of employees.  The Department of Labor has issued a revised “EEOC is the Law” poster, which can be found here:  Poster

Finally, the minimum wage requirements must be flowed-down to subcontractors, which can be accomplished with the addition of the following language to the subcontract:  “Executive Order 13658 – Establishing a Minimum Wage for Contractors, and its implementing regulations, including the applicable contract clause, are incorporated by reference into this contract as if fully set forth in this contract. FAR Clause 52.222-55, Minimum Wages Under Executive Order 13658 (Dec 2014) (Executive Order 13658).”

Take some time to review your contracts and make sure you comply with Executive Order 13568.

“No Recording Policies” — 3 Lessons From the NLRB’s Most Recent Decision


In Alabama, any party to a conversation can record that conversation without the consent of the other party.  In short, if you and I are talking, I can secretly record the conversation without violating any Alabama law.

Many employers try to combat that general rule by implementing “No Recording” policies, which prohibit any type of audio or video recording in the workplace.  While secret recording does not violate Alabama law, it could violate a company policy and therefore serve as a ground for termination of employment.

In 2015, the National Labor Relations Board issued a decision finding that such a policy by Whole Foods Market violated the National Labor Relations Act.  The NLRB theorized that broad “No Recording” policies would prevent employees from engaging in conduct protected by the Act — such as making images of protected picketing, documenting unsafe work conditions, and making recordings for use in future administrative or judicial actions.

The NLRB’s decision has been appealed to the Second Circuit Court of Appeals.  Nevertheless, there are three key lessons that employers can learn:

1. Broad policies that impose a complete ban on any kind of recording in the workplace will be found by the NLRB to violate the National Labor Relations Act.

2. It may be possible craft a narrowly-tailored “No Recording” policy that will satisfy the NLRB.  The NLRB left some room in its decision to allow restrictions on recordings.  At this point, however, the NLRB has not provided clear guidance on the scope of such restrictions.

3. Before disciplining an employee for recording a workplace conversation, employers should consult with their attorney to ensure they do not accidentally violate the Fair Labor Standards Act.

The Three Most Important Things to Know About Employees on Jury Duty


Most people think jury duty is a pain in the rear.  I’ve seen and heard of some creative excuses to get out of jury duty.  There’s even a report that “Jesus Christ” was struck from jury service in Birmingham:  Jesus On Jury Duty

Jury duty can also create hardships for employers.  Nevertheless, Alabama has recognized the importance of jury duty by statutorily creating protections for employees who are called for jury service.  This is significant, because the general rule in Alabama is “employment-at-will”: an employee without an employment contract can be terminated for a good reason, a bad reason, or no reason at all.

Protection of employees serving on juries is one of the few exceptions to employment-at-will in Alabama.  Here are the three most important things to know if one of your employees is called for jury service.

 1.  You cannot terminate an employee who misses time from work for jury service.

Alabama Code Section 12-16-8.1 prohibits termination or any “adverse employment action” because an employee was called for jury service.  Notably, Section 12-16-8.1 prohibits adverse employment actions because an employee “serves” on a jury.  But, the Alabama Supreme Court has interpreted the statute to protect employees from serving in any part of the jury process — including simply being called for jury duty.

2.  You must pay an employee their regular wage for time spent in jury service.

Alabama Code Section 12-16-8(c) requires that full-time employees receive their “usual compensation” for the time they spend in jury service.  As a result, you must pay an employee if they are absent for jury service.

3.  You cannot require the employee to use leave time for jury service.

Your company may provide annual, vacation or sick leave time as a benefit to employees.  If they miss time for jury duty, you cannot require, or even request, that they use paid or unpaid leave when they are called for jury duty.  Ala. Code § 12-16-8(b).


Alabama Football Players:  Arguably Professionals, But Not Employees


Auburn fans love to claim that the University of Alabama has the best “professional” team in college football.  Rumors of free cars and under-the-table cash payments only fuel this speculation.  Recently, some college athletes have attempted to transform such rumors into reality by arguing that they are “employees” of their schools.  Notably, none of these athletes play for SEC football programs.  So, feel free to draw your own conclusions about the financial benefits of playing football in the South.

In 2014, a Regional Director for the National Labor Relations Board found that football players for Northwestern University were “employees” who were entitled to collective bargaining rights under the National Labor Relations Act.  Northwestern appealed that decision to the National Labor Relations Board.  On appeal, the NLRB punted (pardon the pun).  It declined to exercise jurisdiction over the players’ case, which effectively reversed the Regional Director without actually determining if the players were employees.  In fact, the NLRB explicitly left open the possibility that it might consider the issue in the future.

Members of the track and field team at the University of Pennsylvania attempted a different tactic.  In 2014, they filed a law suit arguing that they were “employees” entitled to minimum wage under the Fair Labor Standards Act.  On February 16, 2016, a federal judge in Indiana dismissed that claim.  Among other things, the judge found “that the existence of thousands of unpaid college athletes on college campuses each year is not a secret, and yet the Department of Labor has not taken any action to apply the FLSA to them.”

In short, Auburn fans can continue to proclaim that Alabama players are professionals.  But, it’s unlikely that a judge will consider them to be University employees any time soon.

“Throwed Rolls” and Attorneys’ Fees:  The High Costs of FLSA Violations


On January 22, 2015, Ramona Brown sued Lambert’s Café, III, Inc. in Foley, Alabama for alleged violations of the Fair Labor Standards Act.  You may know Lambert’s as “the only home of throwed rolls” — where servers actually throw dinner rolls to customers.  Ms. Brown claimed that she and other servers at the restaurant were not properly paid for time they were required to work.  A review of court records indicates that the parties entered into settlement negotiations relatively early in the process.  

On September 24, 2015, the court approved a settlement under which Lambert’s paid $38,000.00, which was split among five employees.  Because those employees were “prevailing parties,” their attorneys were entitled to payment of attorneys’ fees.  But, the parties could not agree on the amount of a “reasonable” fee. 

So, on January 27, 2016, Magistrate Judge William E. Cassady of the United States District Court for the Southern District of Alabama entered an order awarding the employees’ attorneys $41,943.15 in fees and costs.  Notably, the employees’ attorneys submitted hours and billable rates to the Court which could have totaled more than $60,000.00 in fees.  Thus, the Lambert’s case demonstrates that the costs of violating the FLSA can easily skyrocket — not only from damages to employees, but also to pay their attorneys.


President Obama’s Executive Order on Pay Transparency Became Effective January 11, 2016


 An Executive Order prohibiting federal contractors from engaging in retaliation became effective January 11, 2016.  That order provides that federal contractors and subcontractors cannot discharge or otherwise discriminate against employees and job applicants for discussing, disclosing or inquiring about compensation.  In short, covered employers cannot tell employees or applicants:  “Don’t talk to each other about how much you are paid.”

Among other things, the order requires that covered employers adopt a pay transparency policy statement.  The Department of Labor has provided a model statement, which  can be found here:  Pay Transparency.  Contractors must modify their policy manuals, provide employees with an electronic or physical posting of the requirements of the rule, and implement the new “EEO Is the Law” poster, which can be found here:  Poster

The order has many requirements and you should consult with counsel to ensure you are in proper compliance.

What Would Saban Do? Preparation for DOL’s New Overtime Rules


businessman-311337_640 (1)We all procrastinate.  Give us a deadline and we’ll wait to the last minute to complete the project.  At the University of Alabama, Nick Saban has rejected that tendency and turned The Process into forward thinking preparation.  While college football players aren’t entitled to overtime compensation, employers can adopt some principles of The Process and start preparing for the Department of Labor’s new overtime rules.

The release-date for the new overtime rules is unclear.  The Department of Labor’s Fall 2015 Unified Agenda stated that the anticipated release date would be in July 2016.  However, in November of 2015, Solicitor of Labor M. Patricia Smith said the rules wouldn’t be issued until “late 2016”.

If you start preparing now, the uncertainly of the release date won’t have as much impact on your business.  We know that the threshold salary to exempt employees from overtime is going to increase.  Right now, an employee making a salary of $23,660 can potentially be exempted from overtime requirements.  In other words, if you pay an employee a minimum salary more than $23,660 and they perform certain executive, administrative or professional duties, you don’t have to pay them overtime.

That threshold amount is going to increase.  The Department of Labor’s draft rule proposed to increase the salary requirement to $50,440 — which is the 40th percentile for full-time salaried workers in America.  Legal pundits believe there is some potential for compromise on the amount, but everybody agrees there will be an increase.  The 35th Percentile is $44,304 per year and the 30th Percentile is $40,196 per year.

Potentially, your business has employees who are making more than the current threshold of $23,440, but less than the potential new threshold — and you are not paying them overtime.  But, under the new DOL regulations, you could be required to pay them overtime.  Start identifying those employees now.  Also, you need to be thinking about tough internal policy decisions.  Do you increase the salary of those employees to “bump” them over the new threshold?  Do you actually lower their salary to account for the overtime that they will now accrue?   Do you take the “hit” to your profitability and keep their salary the same — plus pay overtime.

The new regulations will unquestionably require businesses to make difficult decisions.  But, following The Process, preparing early, and clearly communicating changes to employees can make the transition less difficult.