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SHRM Newsletter: FLSA Lawsuits Hit Record Levels
Posted on Jun. 2, 2014

This is Utah SHRM Legal-mail no. 2014-10 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).

CONTENTS:

-  FLSA LAWSUITS HIT RECORD LEVELS

-  REMINDER RE: FLSA AND DEDUCTIONS FROM EXEMPT EMPLOYEE PAY

COMPANY LAWYERS DO NOT ALWAYS REPRESENT ALL EMPLOYEES

-  COURT REQUIRES CLEAR LANGUAGE IN EMPLOYEE RELEASES

-  FEDERAL JUDGE DECLARES “INTERIM” SAME SEX MARRIAGES VALID

 

FLSA LAWSUITS HIT RECORD LEVELS: In the twelve months preceding March 31, 2014, employees filed a record number of lawsuits claiming employers violated the Fair Labor Standards Act (FLSA). FLSA requires employers to pay overtime pay and a minimum wage to nonexempt employees. According to a recent survey from a management-side employment law firm, over 8,000 FLSA lawsuits were filed during this timeframe, an increase of five percent over the year before and a 438% increase in lawsuits over the past fifteen years. The authors of the survey predict continued increases in claims, because: (1) class actions have been disfavored by the courts so more individual claims are being filed; (2) there is talk of raising the minimum wage; the Department of Labor is said to be drafting new regulations further restricting who can be classified as exempt from the law’s requirements. You can read the full survey results here: http://www.seyfarth.com/news/FLSA052014

REMINDER RE: FLSA AND DEDUCTIONS FROM EXEMPT EMPLOYEE PAY: Speaking of FLSA, remember that to be exempt from overtime pay, an employee must satisfy three tests. First, he/she must be paid on a salary basis. Second, the employee must be paid at least $455/week in salary. And third, the employee must satisfy the jobs duties test of one of the exemptions (executive, administrative, etc.). To satisfy the “paid on a salary basis” requirement, an employee generally must get his/her same salary each week without pay deductions based on the quality or quantity of hours worked. In other words, as a general rule, you cannot pay a salaried exempt employee like an hourly employee without putting the FLSA exemption at risk. From this regulation emerges the general rule that you do not dock an exempt employee’s pay for missing partial days in a work week. However, this rule does not mean you cannot deduct partial day absences from a sick leave bank or a vacation bank or a PTO bank, because that is not actually deducting from an employee’s set salary pay, it is just paying it from another source. The same is true for providing an STD payment to cover part of the salary for work time missed. You can do all of this in partial day increments—and not put the FLSA exemption at risk-- as long as the employee still gets his/her same set salary for the week in question. In other words, these actions are not considered deductions from pay. The FLSA regulations also provide a few exceptions to the “paid on a salary basis” rule, and thus there are circumstances where you can reduce and/or deduct from an exempt employee’s actual pay. These exceptions are outlined in the FLSA regulation found here:  http://www.law.cornell.edu/cfr/text/29/541.602. Examples include: (1) a deduction from pay when an exempt employee is absent for a full day for sickness but is out of paid sick leave; (2) a deduction from pay when an exempt employee is absent for a full day on a disciplinary suspension; and (3) a deduction in pay when an exempt employee is absent for a full day to handle personal matters other than sickness or disability. The regulation also allows for partial day absence deductions of pay when an employee is out on unpaid FMLA, e.g. if he/she missed 2 or 3 hours for an FMLA-covered reason he/she need not be paid for those 203 hours. So, in short, the general rule is do not deduct an exempt employee’s pay in less than a full day increment, unless it is unpaid FMLA leave, and do not deduct at all unless you fit within one of the exceptions outlined in this regulation. The footnote to the general rule is that reductions from leave banks for partial day absences are not considered pay deductions, just payments of the salary from another source.

COMPANY LAWYERS DO NOT ALWAYS REPRESENT ALL EMPLOYEES: When dealing with employment matters that may become lawsuits, it is important for an employer to remember that its lawyers do not necessarily represent all employees of the company; nor can the company always impose a blanket rule barring all plaintiff’s lawyers from any communications with company employees. Lawyer ethical rules and court decisions, as a general rule, state that such a bar--depending on situational facts--can typically exist only regarding employees who have management responsibility, whose act or omission may be imputed to the organization and those whose statements may constitute admissions by the organization with respect to the matter in question. In some situations, an attorney-client privilege may extend to persons whose information or assistance is also needed to allow the lawyer to give legal advice to the company. Questions of representation, privilege and communications bars can be difficult, but they are important to resolve early in a dispute so that the company is properly able to maintain its legal confidences. Be proactive- make sure you discuss these types of issues with your legal counsel so you can obtain the maximum protection possible.

COURT REQUIRES CLEAR LANGUAGE IN EMPLOYEE RELEASES: A Colorado federal court has issued a ruling reminding employers that when using severance agreements for employees age 40 and older, the employee must be advised in writing to seek legal counsel about the release before signing it. The court struck down language in which a release merely passively told the employee he/she may have such discussions with counsel and that he/she had the opportunity for such discussions.

FEDERAL JUDGE DECLARES “INTERIM” SAME SEX MARRIAGES VALID: A Utah federal court judge has issued an order requiring the state to honor as valid all “interim” same sex marriages that occurred in Utah after another federal judge struck down the State’s ban on them but before the United States issued a stay of that ruling. The court held that the interim same sex marriages must be recognized and given the same rights as any other marriage conducted in Utah, including the right to property, inheritance, legal protection and the custody and care of children. If this ruling stands, it also means that employers must give legal recognition to these interim marriages for purposes of employment benefits and matters. The court stayed its ruling for 21 days to allow the State to appeal. The Utah Attorney General has not yet indicated whether the State will appeal. Stay tuned for developments!

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Author

mikeAttorney Michael
Patrick O'Brien

Mike O’Brien is an experienced and accomplished employment attorney, media lawyer and courtroom litigator.  He is active in SHRM and has received the highest possible reviews from rating services like Martindale - Hubbell (AV rating), Chambers USA, Utah Business Legal Elite, Best Lawyers in America, Who’s Who Legal USA, and SuperLawyers.  HR Executive Online has named him as one of America’s most powerful 100 employment lawyers, but keep in mind, this does not mean he is good at moving heavy furniture.

Awards and Recognition

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OBrien Best

Chambers 2011 Attorney

Super Lawyers
Michael Patrick O'Brien
 

Best Lawyers In America, “Salt Lake City Best Lawyers Employment Law Lawyer Of The Year,” 2011-2012

Best Lawyers In America, First Amendment Law, Labor And Employment Law, 2005-2012

Chambers USA, Labor & Employment, 2003-2011

Employment Lawyer Of The Year, Utah State Bar, 2001

Human Resources Executive, Nation’s Most Powerful Employment Lawyers In America, 2010

Mountain States Super Lawyers, 2007-2012

Utah Business Magazine, Legal Elite, Labor And Employment, 2006-2012