Source: https://employingalabama.com/category/wage-hour/page/2/
Timestamp: 2019-04-19 01:20:03+00:00

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The Department of Labor’s Overtime Regulation Was Struck Down By a Federal Judge.
The DOL under the Obama administration was not satisfied with Judge Mazzant’s ruling and filed an appeal with the Fifth Circuit Court of Appeals: DOL Appeals Overtime Ruling That appeal remains pending, but many attorneys believe that the DOL under the Trump administration may abandon the appeal. I will keep you updated as the appeal progresses.
EPL: Does Your Employment Practices Insurance Cover Wage Claims?
Employers should carefully review their EPL policies for coverage of wage claims or risk a denial coverage.
I strongly recommend that my business clients purchase Employment Practices Liability (“EPL”)Insurance. Employment-related claims are extremely costly to defend — even frivolous claims. But, it’s important to do your homework when purchasing EPL Insurance. Many EPL Insurance policies do not cover claims related to employee wage disputes. So, it’s vital that you ask your insurance agent about the full scope of coverage under your policy. A Birmingham company learned that lesson the hard way in a recent decision issued in the Northern District of Alabama. See American Chemicals & Equipment, Inc. v. Continental Casualty Co., No. 6:15-cv-00299-MHH, 2017 WL 2405102 (N.D. Ala. Jun. 2, 2017).
One of American Chemicals’ employees sued in state court claiming that the company failed to pay him the salary and sales commission rate that he was promised when he accepted his offer of employment. American Chemicals asked its insurance company for a defense of the claim, but the insurance company refused to provide that defense, because the claim was excluded by the policy. After settling with the employee, American Chemicals sued its insurance company claiming breach of contract, bad faith failure to pay an insurance claim, negligence and wantonness.
The American Chemicals decision focused upon the insurance company’s duty to defend. Insurance companies frequently have a duty to defend a claim (i.e., pay for the lawyer), even if a claim is not covered. American Chemicals asked United States District Court Judge Madeline Haikala to enter an order finding that the insurance company breached its duty to defend — even if the wage claim was not covered. After interpreting the policy, however, Judge Haikala found that American Chemicals was not entitled to a defense — under its primary argument. Nevertheless, Judge Haikala found an issue that the parties did not argue. The employee’s underlying claim asked for punitive damages, and Judge Haikala found that a punitive damages request might require a defense from the insurance company. So, Judge Haikala ordered the parties to submit briefs to her on that issue. As a result, American Chemicals’ case is severely damaged, but still alive.
Employers can sometimes be required to compensate employees for time spent driving to their work site.
A recent decision from the Eleventh Circuit Court of Appeals demonstrates that, sometimes, employers are required to compensate employees for time spent driving to a work location. See Meeks v. Paco County Sheriff, No, 16-16932, 2017 WL 2116130 (11th Cir. May 15, 2017). In Meeks, a deputy sheriff drove his personal car to a “secure location” at the beginning of every shift. He retrieved a patrol car from the “secure location” and drove to his patrol zone. His employer refused to compensate him for the time driving from the “secure location” to his patrol zone.
The Portal-to-Portal Act discusses activities, associated with work, that are not compensable under the Fair Labor Standards Act. Employers are not required to pay employees for: (1) traveling to and from the actual place of performance of the principal activity or activities which the employee performs; or, (2) activities which are preliminary to or postliminary to the employee’s principal activities. 29 U.S.C. § 254(a). But, an employee’s principal activity or activities are compensable. Meeks, 2017 WL 2116130 at *2.
In Meeks, the Eleventh Circuit found that the time driving to the patrol zone was compensable, because it was part of the deputy’s principal activities. The term “principal activities” includes all activities that are an “integral and indispensable” part of the employee’s duties. Meeks, 2017 WL 2116130 at *2. An activity is “integral and indispensable” if it is an intrinsic element of the activity and one with which the employee cannot dispense if he is to perform the activities. Id. The Court found that driving the patrol car from the “secure location” to the patrol zone was an “intrinsic element” of the deputy’s principal activity — patrolling for crime. Because driving to the patrol zone was part of the deputy’s principal activities, that drive time was compensable.
In most cases, time spent by an employee driving to work is not compensable under the Fair Labor Standards Act — particularly time spent driving from home to work. But, Meeks demonstrates that there are always exceptions in the law. Employers should review their drive-time compensation policies to ensure that they are complying with the FLSA.
The FLSA does not prohibit restaurant owners from taking the tips of employees who are otherwise paid the minimum wage.
Having carefully considered the written submissions and the arguments of the parties and of the amicus curiae, we conclude there is no free standing claim for relief under Section 203(m) of the Fair Labor Standards Act, 29 U.S.C. § 203(m), where, as here, there is no allegation that the employer does not pay the minimum wage.
Aguila v. Corporate Caterers IV, Inc., No. 16-15838, 2017 W 1101081 (11th Cir. Mar. 24, 2017).
With that one sentence, the Court affirmed the decision of the trial court in Auguila v. Corporate Caterers, II, Inc., 199 F.Supp.3d 1358 (S.D. Fla. 2016). In that case, the plaintiffs were delivery drivers who claimed that they were supposed to receive tips, but their employer retained some or all of those tips. They did not claim that their employer failed to pay them minimum wage.
At its heart, the FLSA is designed to ensure that employees are paid: (1) minimum wage; and, (2) applicable overtime. Section 203(m) of the FLSA deals with the minimum wage for tipped employees. It allows employer to pay less than the federally-mandated minimum wage by using the employees’ tips as part of wages. In short, the employer-paid wage, plus tips, should exceed minimum wage. This “tip credit” is frequently misused by employers, who are then sued under the FLSA for failing to pay the correct minimum wage.
But, the employees in Aguila did not claim that they were paid less than minimum wage. Instead, they argued that Section 203(m) of the FLSA gave them an independent right to retain their tips. The employees were asking the Court to expand the scope of the FLSA beyond minimum wage and overtime to include a new right to retain tips. They based their arguments on 2011 regulations issued by the United State Department of Labor and a decision from the Ninth Circuit Court of Appeals (traditionally one of the most liberal federal courts). Despite those arguments, the trial court and the Eleventh Circuit in Aguila declined to expand the FLSA.
Aguila should not be taken as carte blanche authorization for employers to seize their employees’ tips. Aside from morale problems, employees could potentially sue in state court for fraud and conversion — both of which carry the possibility of punitive damages. Instead, Aguila should merely be read as a decision limiting the scope of federal power over employers.
A federal judge rejected an effort to enforce Birmingham’s minimum wage ordinance.
On February 1, 2017, United States District Court Judge David Proctor rejected an attempt to force businesses to comply with Birmingham’s minimum wage ordinance. In February 2015, the Birmingham City Council passed an ordinance requiring all businesses to pay a minimum wage of at least $10.10 per hour. The federally-required minimum wage is $7.25 per hour, and Alabama does not have a state-mandated minimum wage.
In response to Birmingham’s ordinance, in 2016 the Alabama Legislature enacted the Alabama Uniform Minimum Wage and Right-to-Work Act. That Act establishes the Legislature’s “complete control” over minimum wage policy in the State. After passage of that Act, Birmingham declined to enforce the minimum wage ordinance, and Alabama Attorney General Luther Strange advised Birmingham businesses on the enforcement of the ordinance.
The NAACP, Greater Birmingham Ministries and several individuals sued the State of Alabama, the City of Birmingham, Attorney General Strange and Birmingham Mayor William Bell. Primarily, this was a race-based challenge to the Alabama Act. The plaintiffs claimed that the purpose and effect of the Act was to transfer control over minimum wages and all matters involving private sector employment in the City of Birmingham from municipal officials elected by a majority-black local electorate to legislators elected by a statewide majority-white electorate.
Judge Proctor’s decision provides some reassurance to Birmingham employers that they are only subject to the federally-mandated minimum wage. Nevertheless, his decision leaves open the possibility that individual employees might sue their employers for violating the Birmingham minimum-wage ordinance. Undoubtedly, any employers sued under the ordinance will raise the Alabama Uniform Minimum Wage and Right-to-Work Act as a defense.
In Garcia-Celestino, Basiliso Ruiz provided migrant workers to pick oranges for Consolidated Citrus. Consolidated paid based upon the number boxes of fruit picked by each worker. If the worker did not pick enough boxes of fruit to achieve minimum wage, Consolidated Fruit paid additional “build-up pay” to raise the worker to minimum wage. Unfortunately, Mr. Ruiz then deprived the migrant workers of minimum wage by requiring them to hand-over the “build-up pay” to him under threat of deportation. Ultimately, the migrant workers sued both Mr. Ruiz and Consolidated Citrus for failure to pay minimum wage under the FLSA.
The primary issue in Garcia-Celestino was whether the migrant workers were joint employees of Consolidated Citrus for purposes of breach of contract and FLSA claims. The trial court found that Consolidated Citrus was a joint employer for both claims, and relied upon the FLSA’s “suffer or permit to work” standard of “employer” to reach that conclusion. Under that definition, the ultimate question is whether, as a matter of “economic reality,” the hired individual is “economically dependent” upon the hiring entity.
The Eleventh Circuit found that the trial court incorrectly applied the “suffer or permit to work” standard to the migrant workers’ breach of contract claims. As a result, the Eleventh Circuit remanded the case for the trial court to determine whether the migrant workers were Consolidated Citrus’s employees under the common-law standard — which focuses mostly on control. Nevertheless, for purposes of the FLSA minimum wage claims, the Eleventh Circuit found that the trial court correctly applied the “suffer or permit to work” standard, and concluded that Consolidated Citrus was a joint employer for purposes of the minimum wage claims.
Garcia-Celestino provides a cautionary tale for all employers — not just farmers. If you are contracting-out labor, you run the risk of liability as a joint employer of the contract laborers.

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