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Rachel Machisak

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The Fifth Circuit Court of Appeals issued an opinion last week holding for the first time that a “day rate” in excess of $455 paid to a highly compensated employee meets the requirements of the “salary basis” test under the Fair Labor Standards Act (FLSA).

Specifically, in Faludi v. U.S. Shale Solutions, No. 17-20808, 2019 WL 3940878 (5th Cir. Aug. 21, 2019), the plaintiff, a consultant, brought suit alleging that his former client and employer[1] owed him overtime under the FLSA because the plaintiff had not been paid on a salary basis. Instead, the plaintiff received $1,000 per day for any day on which he performed any amount of work in Houston and $1,350 per day for any day in which he performed any amount of work outside of Houston. However, under the plaintiff’s arrangement with the defendant-employer, if he worked more than 40 hours in a week, he did not receive any overtime premiums. In the district court, the defendant-employer argued, and the district court found, that the plaintiff’s claims failed as a matter of law because he fell within the FLSA’s “highly compensated employee” exemption.

On appeal, the plaintiff argued that he did not qualify for the “highly compensated employee” exemption because the day rate payment system used by his employer did not satisfy the “salary basis” test. In support of his claim, the plaintiff argued: (1) the day rate system did not calculate pay “on a weekly, or less frequent basis” in violation of 29 C.F.R. § 541.602(a); (2) the plaintiff voluntarily reduced some of his day rate payments on invoices he submitted to the defendant-employer for days that he performed less than a full day’s work; and (3) the day rate system did not satisfy the “reasonable relationship” test articulated in 29 C.F.R. § 541.604(b).
Continue Reading Fifth Circuit approves day rates for some highly compensated employees

Employers in three major cities in the Lone Star State should begin preparing for compliance with paid sick leave ordinances. Joining a number of other states and cities to have enacted paid sick leave laws, the cities of San Antonio, Austin, and Dallas passed ordinances requiring private employers to provide employees with paid sick leave. While the Austin ordinance has been blocked due to litigation regarding its constitutionality, which is now before the Texas Supreme Court, the San Antonio and Dallas ordinances are set to go into effect on August 1, 2019 (except as to employers with five or fewer employees in the preceding year, for which paid sick leave obligations will not go into effect until August 1, 2021).

The paid sick leave ordinances – which largely mirror each other – require all private employers to provide employees who perform at least 80 hours of work per year in the applicable city with one hour of paid sick leave for every 30 hours worked. Employees working for employers with 15 or more employees may accrue a maximum of 64 hours of paid sick leave annually. Employees who work for employers with fewer than 15 employees at all times during the preceding 12 months may accrue a maximum of 48 hours. Employees may carry over accrued, unused paid sick leave up to the maximum except where the employer makes sick leave equal to the maximum amount available to employees at the beginning of the year.Continue Reading Paid sick leave to take effect soon for employers in three cities in the Lone Star State