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The Sixth Circuit Gives Employers a “Twofer”: An Employer’s Automatic Pay Deduction Policy Does Not Automatically Violate the FLSA and a Class Plaintiff Must “Commence” Suit

In Frye v. Baptist Memorial Hospital, Inc., the United States District Court for the Sixth Circuit handed down not one, but two favorable rulings for employers in an FLSA collective action. First, in considering an automatic pay deduction policy for unpaid meal breaks in a collective action for the first time, the Court held that such a policy does not automatically, or per se, violate the FLSA. Second, a class representative plaintiff must formally opt-in to their own case to "commence" suit and stop the running of the statute of limitations.

1.  The Sixth Circuit Holds that Automatic Pay

Supreme Court finds pharmaceutical sales reps exempt under the outside sales exemption

In a highly anticipated decision under the Fair Labor Standards Act, the United States Supreme Court handed down a big win on Tuesday for the pharmaceutical industry when the Court found pharmaceutical sales representatives are covered by the outside sales exemption in Christopher v. Smith Kline Beecham Corp. We covered in previous posts the differing interpretations of the Second Circuit, which held the reps to be non-exempt, and the Ninth Circuit, which said they were exempt. The Court agreed with the Ninth Circuit that the sales activity pharma sales reps engaged in were sufficient "outside sales" even though federal …

Verizon Consent Decree Provides Road Map For Surviving EEOC Scrutiny of No Fault Attendance and Leave of Absence Policies

On July 6, 2011, the EEOC announced a settlement with Verizon of a nationwide class action lawsuit alleging that Verizon violated the ADA by refusing to make exceptions to its “no fault” attendance plans to accommodate employees with disabilities. According to the EEOC’s press release, Verizon violated the ADA by failing to provide reasonable accommodations for people with disabilities, such as making an exception to its attendance plans for individuals whose “chargeable absences” were caused by their disabilities. Instead, the EEOC said, the company disciplined or terminated employees who needed such accommodations. In addition to requiring the payment of …

Wal-Mart v. Dukes: Supreme Court Rejects “Expansive” Gender Bias Class Action In Absence of “General Policy of Discrimination”

The much-awaited decision of the United States Supreme Court is here. Dubbed by Justice Scalia as "one of the most expansive class actions ever," the Supreme Court unanimously reversed the decision of the Ninth Circuit Court of Appeals which had affirmed the certification of a class of approximately 1.5 million current and former female employees alleging discrimination in pay and promotion. While the result was widely anticipated, the decision clarifies some key class action principles in a manner favorable to employers defending such cases.

Throughout the lengthy proceedings (the District Court certified a class in 2004), the employees claimed …

Supreme Court Time Travels with an ERISA Case

Supreme Court decisions about ERISA cases, while infrequent, typically contain some surprises, as demonstrated most recently in CIGNA Corp. v. Amara.

In 1997, CIGNA notified employees that it was freezing accruals under its traditional defined benefit plan, and converting the plan into a cash balance plan. A cash balance plan is a "hybrid" defined benefit plan with features similar to a defined contribution plan. The method for determining accruals under the cash balance plan is different from the method under the traditional defined benefit plan, and in many cases takes into consideration the benefits already accrued under the traditional …

Supreme Court’s AT&T Mobility Decision Provides Support For Use Of Employment Arbitration Agreements With Class Action Waivers

On April 27, 2011, the United States Supreme Court held that the Federal Arbitration Act (“FAA”) preempted California state contract law which courts had applied to invalidate arbitration agreements that did not permit class arbitration. Although the decision involved a consumer contract, the Supreme Court’s reasoning provides a basis for employers to seek enforcement of employment agreements that prohibit workplace class actions and require the individual arbitration of employment-related claims.…

A Skeptical U.S. Supreme Court Vigorously Questions Certification of a Mammoth Sex-Discrimination Class Action Lawsuit

On Tuesday, the U.S. Supreme Court heard oral argument on Wal-Mart’s appeal of the Ninth Circuit’s en banc decision upholding the certification of a class action gender discrimination lawsuit in Dukes v. Wal-Mart Stores, Inc. As noted by a number of commentators (among them The Wall Street Journal, Forbes, The Christian Science Monitor, and CNN), the tone of the Court’s questioning indicates that the Court is likely to rule in Wal-Mart’s favor.

This appeal stemmed from a federal court’s certification of a nationwide class of female employees of Wal-Mart who were allegedly subjected to discriminatory pay …

U.S. Supreme Court To Decide Significant Class Action Issues in Dukes v. Wal-Mart

On Monday, the U.S. Supreme Court announced that it would hear Wal-Mart’s appeal of the Ninth Circuit’s en banc decision upholding the certification of a class action gender discrimination lawsuit in Dukes v. Wal-Mart Stores, Inc. 

As previously noted here and here,  the plaintiffs in Dukes sought to obtain certification of a nationwide class of women who allegedly have been subjected to discriminatory pay and promotion policies. The proposed class consists of women employed since December 26, 1998, in a range of Wal-Mart positions, from part-time, entry-level hourly employees to salaried managers. 

Plaintiffs contend that Wal-Mart’s strong, centralized structure fosters …

Explosion of FLSA Litigation Should Prompt Employers to Review Their Practices

Recent reports have indicated that the number of FLSA collective actions rose sharply in 2009. Many believe this trend will continue in 2010 as employees gain increased awareness of their rights under wage and hour laws and the plaintiffs’ bar recognizes the potential value of FLSA collective actions.

Indeed, there has been a recent flurry of activity across the country in the area of wage and hour class actions. Assistant managers at Foot Locker Retail Inc. filed a nationwide collective action in the Southern District of California, alleging that the company misclassified them as exempt and failed to pay them overtime wages. Similarly, …

Ninth Circuit to Hear Argument on Class Certification Decision in Wal-Mart Class Case

On February 13, 2009, the U.S. Court of Appeals for the Ninth Circuit announced it will review the February 2007 decision to certify a class that potentially includes 1.5 million current and former female employees allegedly underpaid and denied promotion opportunities on the basis of their sex. As reported in our earlier post, this class has the potential to be the largest sexual discrimination suit in U.S. history and could be awarded potential damages into the billions of dollars. This class action was originally filed in 2001. Wal-Mart argued at the district court level and to the panel that the class …

What Do Reality Television Shows and Employment Law Have In Common?

Class actions, of course. California courts have preliminarily approved class-action settlements in two wage-and-hour lawsuits against the television networks and production companies responsible for such entertainment gems as “The Bachelor,” “The Bachelorette,” “Trading Spouses,” “Joe Millionaire,” and “My Big Fat Obnoxious Fiancee.” 

The lawsuits accused the companies of failing to pay overtime wages, denying meal and rest periods, falsifying pay stubs, and forcing employees to falsify time records. The companies will pay more than $4 million to settle the claims. A hearing for final approval of both settlements should take place in May 2009. …

Ninth Circuit Panel Again Upholds Granting of Class Action Status to Wal-Mart Female Workers; Wal-Mart Again Petitions For En Banc Review

In an unusual procedural move, a Ninth Circuit panel issued a revised opinion and rejected—for the second time—Wal-Mart’s request to overrule a lower court decision granting class action status to a lawsuit by six women representing a class of more than 1.5 million female workers. Dukes v. Wal-Mart, Inc., Case Nos. 04-16688 and 04-16720, 2007 U.S. App. LEXIS 28551 (9th Cir. Dec. 11, 2007). The class includes all female workers—from part-time, entry-level hourly employees to full-time, salaried managers—at Wal-Mart stores from December 1998 to the present “who have been or may be subjected to Wal-Mart’s challenged pay and management …

IRS Targets FedEx’s Treatment of Drivers as Independent Contractors

 From FedEx Corporation’s most recent 10Q filing comes the following:

“On December 20, 2007, the Internal Revenue Service (“IRS”) informed us that its audit team had concluded an audit for the 2002 calendar year regarding the classification of owner-operators at FedEx Ground. The IRS has tentatively concluded, subject to further discussion with us, that FedEx Ground’s pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Similar issues are under audit by the IRS for calendar years 2004 through 2006.