Hunton Retail Law Resource

On July 29, 2021, the US Department of Labor filed a final rule rescinding the Trump-era “Joint Employer Status Under the Fair Labor Standards Act” rule (29 CFR part 791), which went into effect on March 16, 2020.

For over 30 years, most district courts throughout the country have used a two-step conditional certification process to govern certification of collective actions under the Fair Labor Standards Act (FLSA).  But in its recent and game-changing opinion, Swales v. KLLM Transport Services, LLC, the Fifth Circuit rejected that two-step process and laid out a stricter framework for FLSA collective actions. This is an important decision for the retail industry, a frequent target of FLSA lawsuits, given the industry’s large workforce.  Retailers facing putative FLSA collective actions in the Fifth Circuit (Texas, Louisiana and Mississippi federal courts) will benefit from the increased early scrutiny of certification issues mandated by this decision, and retailers across the country should keep a close watch on whether the Fifth Circuit’s opinion is adopted by other federal courts.

On July 1, 2019, the Department of Labor (“DOL”) issued an opinion letter regarding permissible rounding practices under the Service Contract Act (“SCA”).  Although the SCA governs government contractors, the DOL’s guidance is nevertheless helpful to retailers because the SCA incorporates Fair Labor Standards Act (“FLSA”) rounding principles, which are applicable to them.

As reported on the Hunton Employment & Labor Perspectives Blog on May 14, 2019, Massachusetts’ highest court, The Supreme Judicial Court (“SJC”), recently issued its long awaited decision in Sullivan v. Sleepy’s LLC, SJC-12542, in which the SJC responded to certified questions of first impression from the United States District Court for the District of Massachusetts.

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As reported on the Hunton Employment & Labor Perspectives blog, say an employee slips $20 from the register and even admits to it when you show the camera footage. Or, more innocently, say an employee is overpaid $20 entirely by accident. If the employee refuses to give it back, should you deduct the $20 from the employee’s paycheck?

Earlier this month, the Department of Labor (“DOL”) dropped its defense of an Obama-era regulation that sought to increase the salary level for overtime-exempt employees from $23,660 per year to $47,476 per year. The regulation had been set to take effect in November 2016, but a last-minute preliminary injunction issued by a federal district court in Texas stayed the implementation of the regulation.

In the preliminary injunction ruling, the district court ruled that the new $47,476 salary threshold exceeded the scope of the DOL’s authority because such a high salary level had the effect of making an employee’s salary—and not their primary duty—the determinative factor in the exemption inquiry. Importantly, the district court’s preliminary injunction ruling went well beyond the appropriateness of the particular salary level at issue in the new regulation, and instead expressed the broader view that the DOL lacked the authority to impose any salary level requirement (regardless of the level of salary chosen) because the relevant provision of the FLSA focused on an employee’s duties, not their salary. 

Recently, Kurt Larkin and Ryan Glasgow, partners on Hunton & Williams’ Labor & Employment team, discussed the possible effects of a recent Fourth Circuit Court of Appeals case that creates an altogether new and incredibly broad joint employment standard under the Fair Labor Standards Act (“FLSA”). They opine that the decision threatens to redefine the contours of joint employer liability under the FLSA and severely impact key business arrangements, like the franchise model.

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As reported on the Hunton Employment & Labor Law Perspectives blog, the United States Supreme Court has granted consolidated review of three cases to determine whether arbitration agreements that waive employees’ rights to participate in a class action lawsuit against their employer are unlawful. The Court’s decision to address the uncertainty surrounding class action waivers of employment claims follows a circuit split last year in which the Fifth and Eighth circuits upheld such waivers and the Seventh and Ninth circuits found that such waivers violate the National Labor Relations Act (“NLRA”). Given the increasingly widespread use of class action waivers by employers to stem costly class and collective actions, the high court’s ruling is likely to have a significant nationwide impact.

Under the Fair Labor Standards Act’s (“FLSA’s”) white-collar exemptions, an employee must meet both a duties and a salary basis test in order to be exempt from overtime requirements. Currently, the salary basis test requires that the employee receive at least $455 per week in salary. However, under a recent Department of Labor rulemaking, the weekly salary amount is set to more than double to $913 per week effective December 1, 2016. Thus, employers must ensure that any white-collar-exempt employee making less than $913 per week either (1) receives a salary increase to at least $913 per week to continue the overtime exemption or (2) is reclassified to non-exempt and receives overtime when working more than 40 hours in a week. 

As reported in the Hunton Employment and Labor Law Blog, under the Fair Labor Standards Act (“FLSA”), employers who use a tip credit to satisfy their minimum wage obligations for tipped employees must follow certain rules related to those tips. One of those rules relates to the use of tip pools – i.e., pooling of tips received by multiple tipped employees and then dividing the total among the pool participants based on a specified formula. Under Section 3(m) of the FLSA, employers who rely on the tip credit and who require their tipped employees to contribute their tips to a tip-pooling arrangement must ensure that the only employees who participate in the pool are those that “customarily and regularly” receive tips. This typically means that managers, hostesses, cooks, dishwashers and other non-tipped employees cannot participate in the tip pool if the employer wants to rely on the FLSA’s tip credit.

As reported on the Hunton Employment and Labor Law Blog, the United States Supreme Court has denied a restaurant manager’s petition seeking review of whether parties may stipulate to the dismissal with prejudice of a lawsuit alleging violations of the Fair Labor Standards Act (“FLSA”), or whether judicial or Department of Labor (“DOL”) approval is a prerequisite to such a dismissal, as the Second Circuit held in his case, Cheeks v. Freeport Pancake House, Inc. Having declined the petition for writ of certiorari, FLSA lawsuits will remain more difficult to resolve for employers in New York, Connecticut and Vermont.

On January 20, 2016, the US Department of Labor (“DOL”) became the latest federal agency to advocate for an expansive concept of joint employment. The DOL’s Wage and Hour Administrator took the position that joint employment under the Fair Labor Standards Act “should be defined expansively” and “as broad as possible.” The new Administrator’s Interpretation, along with the National Labor Relations Board’s recent joint employer ruling in Browning-Ferris, suggests a coordinated, federal push to expand joint-employer liability under a host of labor and ...

Earlier this month, a group of former delivery drivers filed a putative collective action lawsuit against an online retailer and Courier Logistics Services, LLC (“CLS”). The case is pending before the United States District Court for the District of Arizona. The plaintiffs allege that the two companies willfully misclassified them as independent contractors and denied overtime pay properly due under the federal Fair Labor Standards Act (“FLSA”).