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The Department of Labor’s (DOL’s) Wage and Hour Division recently issued three new opinion letters addressing the Fair Labor Standards Act’s (FLSA’s) sales exemptions. Two letters address the outside sales exemption, and the third addresses the retail or service establishment exemption.

FLSA2020-6: Do salespeople who travel to different locations to sell their employers’ products using their employers’ mobile assets qualify for the outside sales exemption?

The first opinion letter, FLSA2020-6, addresses whether salespeople who use “stylized” trucks to travel to high-population areas and events to sell products fall within the outside sales exemption of the FLSA.

Ordinarily, a position will qualify for the exemption only if (a) the employee’s primary duty is “making sales” to or “obtaining orders or contracts for services” from customers; and (b) the employee is “customarily and regularly engaged” in performing duties “away from the employer’s place or places of business.”  29 C.F.R. sections 541.500(a), 541.501, 541.502. The exemption includes not only sales work itself, but also “work performed incidental to and in conjunction with the employee’s own outside sales or solicitations.” 29 C.F.R. section 541.500(b).

In FLSA2020-6, the DOL concluded that the employees satisfy both requirements and are therefore exempt.Continue Reading Are your sales employees exempt? DOL provides guidance in three new opinion letters

California law does not require employers to provide paid vacation. But if a California employer does choose to give paid vacation time, state legal requirements apply regarding accrual and compensation. For example, vacation may not be on a “use it or lose it” basis, and all vested but unused vacation is considered earned compensation that must be paid to the employee when their employment ends. Cal. Labor Code section 227.3. These rules apply to any unrestricted paid time off (PTO), including floating holidays and PTO plans that combine vacation and sick time into a single policy.

To avoid these restrictions and increase employee flexibility, many California employers have implemented what are colloquially referred to as “unlimited” vacation plans. In such plans, employees receive vacation time that does not accrue and is not subject to specified limits. Instead, an employee’s use of vacation is conditioned on management approval and business- or performance-related factors (for example, not interfering with business operations, completion of job duties, etc.). However, a recent decision from a California Court of Appeal, McPherson v. EF Intercultural Foundation, Inc. (April 1, 2020), calls into question the legal and practical viability of these “unlimited” vacation plans.
Continue Reading California Court of Appeal addresses “unlimited” vacation policies

The federal Occupational Safety and Health Administration (OSHA) and certain state plan safety regulators have issued guidance regarding potential workplace hazards resulting from exposure to COVID-19.  This article discusses the content and implications of the new guidance, as well as related guidance from the Center for Disease Control (CDC).

OSHA, which regulates worker health and safety in the 22 states that do not have approved state plans, has published guidance regarding the protection of workers from COVID-19.  Although the agency has not promulgated a regulation that specifically addresses COVID-19, OSHA identifies several regulatory standards that apply to the protection of workers from infectious disease hazards, including:

  • 29 C.F.R. 1910, Subpart I – Personal Protective Equipment (PPE)
  • 29 C.F.R. 1910, Subpart J – General Environmental Controls
  • 29 C.F.R. 1910, Subpart Z – Toxic and Hazardous Substances
  • 29 C.F.R. 1904 – Recordkeeping and Reporting Occupational Injuries and Illnesses
  • Section 5(a)(1) of the Occupational Safety and Health Act – General Duty Clause

Continue Reading OSHA and state agencies issue COVID-19 guidance: what employers and businesses need to know

In 2010, the United States Supreme Court struck a blow to class action plaintiffs subject to Federal Arbitration Act (FAA)-covered arbitration agreements when it concluded that a court may not compel class arbitration when the agreement is silent regarding the availability of such proceedings. Stolt-Nielsen SA v. AnimalFeeds Int’l, 559 U.S. 662 (2010). “[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Id. at 684.

On April 24, 2019, the Court went one step further, holding that “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement” consented to class arbitration. Lamps Plus, Inc. v. Varela, Case No. 17-988 (Apr. 24, 2019) (Lamps Plus). The Court reversed the Ninth Circuit decision, which found that contractual ambiguity coupled with state contract law requiring courts to construe ambiguities against the drafter created a contractual basis for class arbitration. See Varela v. Lamps Plus, Inc., 701 Fed. Appx. 670, 673 (9th Cir. 2017). The Court held that the FAA preempted the state contract law doctrine as applied by the Ninth Circuit because it “manufactured [class arbitration] by state law rather than consen[t].” When an arbitration agreement is ambiguous regarding class proceedings, the Court will “not seek to resolve the ambiguity by asking who drafted the agreement.” Rather, the FAA provides the default rule that class arbitration is not available when the contract is ambiguous.Continue Reading Class arbitration requires contractual clarity

In a recent decision involving SuperShuttle drivers, the National Labor Relations Board (NLRB or Board) overruled a 2014 decision making it less likely a worker would be deemed an independent contractor, returning to the more employer-friendly common law test to determine independent contractor status.

In 2014, the Board purported to clarify the standard for evaluating whether a worker is an independent contractor (see FedEx Home Delivery, 361 NLRB 610 (2014)). In FedEx, the Board articulated a new factor in the contractor analysis – whether “putative independent contractor is … rendering services as part of an independent business” (Id.) In doing so, the Board diminished the significance of the putative contractor’s entrepreneurial opportunity in the independent contractor analysis by making it one aspect of the newly created “independent business” prong (Id. at 619).

Last week, the Board overruled FedEx and returned to the traditional common law test. SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019). Under that test, “entrepreneurial control, like employer control, is a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain” (Id. at *9). The Board held that the test articulated in FedEx “fundamentally shifted the independent contractor analysis … to one of economic realities, i.e., a test that greatly diminishes the significance of entrepreneurial opportunity and selectively overemphasizes the significance of ‘right to control’ factors relevant to perceived economic dependency” (Id. at *7-8).Continue Reading NLRB returns to more employer-friendly independent contractor test

On January 11, 2019, the National Labor Relations Board clarified and narrowed the standard for finding that an employee engaged in protected concerted activities under the National Labor Relations Act. See Alstate Maintenance, LLC, 367 NLRB No. 68 (2019). In doing so, the board overturned a 2011 decision – WorldMark by Wyndham, 356 NLRB 765 (2011) – that held that an employee who protests at a group meeting is necessarily engaged in concerted protected activity.

Summary of decision

In Alstate, a manager approached airport baggage handlers (referred to as skycaps) and requested that they help unload a soccer team’s equipment. One of the skycaps, Trevor Greenidge, responded that “we did a similar job a year prior and we didn’t receive a tip.” When the soccer team’s equipment arrived, the skycaps walked away. The employer terminated Greenidge “for griping about not being tipped.” Greenidge contended that his comment regarding lack of tips (not the act of walking away from the unloading task) was protected concerted activity and thus his termination violated the Act.

The board rejected the employee’s argument, concluding that Greenidge’s conduct was neither concerted nor engaged in for mutual aid or protection. In reaching this conclusion, the board reaffirmed the standard for protected concerted activities derived from its earlier decisions in Meyers Industries, 268 NLRB 493 (1984) and Meyers Industries, 281 NLRB 882 (1986).Continue Reading NLRB clarifies standard for protected concerted activity

In an important decision for California health care employers, the California Supreme Court recently confirmed that certain health care employees are allowed to waive their second meal breaks even if they work more than 12 hours in a shift.

History of the Gerard litigation

In 2015, the California Court of Appeal shocked health care employers throughout California by invalidating section 11(D) of Wage Order 5, which permits many health care employees (for example, nurses involved in patient care, pharmacists, etc.) to waive second meal breaks even when their shift exceeds 12 hours, Gerard v. Orange Coast Mem’l Med. Ctr., 234 Cal. App. 4th 285 (2015) (Gerard I). The Court concluded that section 11(D) was inconsistent with Labor Code section 512, which only permits a second meal period waiver “if the total hours worked is no more than 12 hours.” Lab. Code § 512(a). The same court reversed itself in 2017 after the California Supreme Court instructed it to reconsider Gerard I in light of subsequent legislative enactments seeking to nullify the decision and clarify existing law, Gerard v. Orange Coast Mem’l Med. Ctr., 9 Cal. App. 5th 1204 (2017) (Gerard II).

On December 10, 2018, after a decade of litigation, the California Supreme Court affirmed Gerard II, concluding that section 11(D) is not inconsistent with the Labor Code, Gerard v. Orange Coast Mem’l Med. Ctr., 2018 WL 6442036 (Cal. Dec. 10, 2018). Thus, health care employees can waive their second meal breaks even on workdays when their shift exceeds 12 hours.Continue Reading California Supreme Court clarifies rules regarding health care employees’ waiver of second meal breaks