Category: Uncategorized

SECOND CIRCUIT RULES IN FAVOR OF APPLEBEE’S RESTAURANT WORKERS IN WAGE-AND-HOUR SUIT

In 2010, workers at Applebee’s restaurants located in New York sued franchisee owner, T.L Cannon Corp. (“Cannon”), for alleged violations of the Fair Labor Standards Act and New York Labor Law. Specifically, Plaintiffs claimed that Cannon failed to pay hourly employees an extra hour of pay when working a ten-hour workday pursuant to state regulations and also required managers to subtract pay for rest breaks they did not actually take. Plaintiffs moved for class certification on both claims. The district court, relying upon a misreading of the Supreme Court case, Comcast Corp. v. Behrend, found that since damages were not measurable on a class-wide basis, Plaintiffs motion for class certification must be denied. The district court construed Comcast as holding that the failure to offer a damages model that is susceptible of measurement across the entire class is fatal to the class certification question.

Plaintiffs appealed the lower court’s decision. Yesterday, the United States Court of Appeals for the Second Circuit vacated and remanded the order of the district court. The Second Circuit found that the lower court misinterpreted the Comcast decision when it denied class certification to Plaintiffs solely based on the damages issue and ruled that individualized damages determinations alone cannot preclude class certification. The case will now return to the district court, which will decide whether to certify the class based on the proper standards.

The case is titled Roach v. T.L. Cannon Corp., and the full decision can be read here.

NEW JERSEY SUPREME COURT HOLDS THAT WORKER-FRIENDLY TEST TO BE USED IN DETERMINING INDEPENDENT CONTRACTOR STATUS

Last week, the New Jersey Supreme Court ruled in Hargrove v. Sleepy’s, LLC that the “ABC” test should be used in determining employee or independent contractor status under New Jersey wage laws, namely, the NJ Wage Payment Law and the NJ Wage and Hour Law. This decision is significant as the ABC test is broader and imposes stricter standards upon employers in comparison to other tests used to determine independent contractor status under other employment laws.

Under the ABC test, an individual is presumed to be an employee unless the company can show the following three elements: (A) that the individual has been and will continue to be free from the company’s control or direction over the performance of their service, both by contract and in fact; (B), that the service provided by the individual is outside the usual course of the business for which such service is performed, or that the service is performed outside of all places of business of the company; and (C) that the individual is customarily engaged in an independently established trade, occupation, professional or business.   If the company fails to prove all three of these factors, then the individual will be classified as an employee – not an independent contractor – under New Jersey wage laws.

The Hargrove case was brought by delivery drivers who alleged Sleepy’s misclassified them as independent contractors, which resulted in both financial and non-financial losses to them.   The district court held in favor of Sleepy’s and ruled that the plaintiffs were properly classified as independent contractors pursuant to different test. Plaintiffs then appealed, and the Third Circuit Court of Appeals sought certification from the Supreme Court of New Jersey regarding what test should be used to determine employment status for purposes of the NJ Wage Payment Law and the NJ Wage and Hour Law.   As explained above, the Supreme Court held that the ABC test should be applied.

To read the full decision, please click here. This firm will continue to monitor the developments in this case.

NEW YORK SERVICE WORKERS SEEK RAISES

Like many states, New York allows restaurants and hotels to pay tipped employees, including servers and busboys, less than the minimum wage of $8.75 an hour, provided they make up the difference in tips. New York’s tipped wage has not increased since 2011, and the federal tipped wage of $2.13 per hour has not changed in over two decades. However, the state is now considering raising its $5.00 per hour tipped minimum wage to $7.00 per hour, so workers will not have to rely so heavily on tips. Seven states, including California, have eliminated their tipped wage mandates entirely and require tipped workers to be paid the minimum wage before tips. But, earlier this month, the state wage board in New York voted against eliminating the wage entirely and is set to vote on the increase to $7.00 per hour in the upcoming weeks.

The firm will continue to monitor the developments regarding this initiative.

NEW YORK AND NEW JERSEY MINIMUM WAGE INCREASES IN YEAR 2015

The new year brings an increase in the hourly minimum wage for workers in various states, including New York and New Jersey. Effective December 31, 2014, the minimum wage rate in New York state rose 9% from $8.00 to $8.75 per hour, and New Jersey’s minimum wage rate modestly increased from $8.25 to $8.38.

Although New York’s minimum wage rate is again set to increase to $9.00 per hour by the end of 2015, Governor Cuomo announced a proposal yesterday which would raise the minimum wage to $11.50 an hour in New York City and $10.50 an hour in the rest of the state, if passed by the legislature. Cuomo stated that a wage increase was necessary due to New York’s high cost of living.

NLRB NAMES MCDONALD’S CORPORATION AS ‘JOINT EMPLOYER’ FOR FRANCHISEE LABOR VIOLATIONS

As we stated in our previous blog, NLRB general counsel, Richard Griffin, determined that McDonald’s Corporation is jointly liable for the unfair labor practices of its franchisee operators. Consequently, last week, Griffin announced that the he has issued complaints against both McDonald’s USA LLC as well as its franchisees over alleged labor law violations on the premise that McDonald’s Corporation was a “joint employer” of workers at its franchisees. The complaints allege that McDonald’s and certain franchisees violated the rights of workers who took steps to improve their wages and working conditions by making statements and taking actions against them for participating in nationwide protests and others activities during the past 2 years. The NLRB stated that McDonald’s, through its franchise relationships, “engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations.” Griffin stated is would proceed with 13 cases involving nearly 80 allegations against McDonald’s and affiliated storeowners.

NLRB RULES THAT WORK EMAIL PERMITTED TO BE USED FOR UNION ORGANIZING

In a decision overruling a past ruling, the NLRB held last week that employers could not prohibit employees from using their work email to communicate with others regarding union organization during non-work periods. The majority held that the workplace is “uniquely appropriate” and “the natural gathering place for such communications,” and also noted that “the use of email as a common form of workplace communication has expanded dramatically in recent years.” The Board was cautious, however, and stated that this ruling would only apply to those workers who were granted access to the employer’s email system in the course of their work, and that an employer may justify a total ban on non-work use of email if it was necessary for purposes of production or discipline.

The case was brought by the union, Communications Workers of America, which unsuccessfully attempted to unionize workers at Purple Communications, Inc., a California-based company, and alleged that the company’s email restrictions violated the National Labor Relations Act. In rendering its decision, the Board balanced employers’ property rights with workers’ freedom to communicate and organize. The full decision could be read here.

NURSING HOME SUED FOR UNIFORM POLICY

A certified nursing assistant, Carole Guerra, commenced a FLSA collective action alleging that HCR Manor Care, Inc., a nursing home in Philadelphia, failed to pay employees for time spent on maintaining uniforms outside of their regular work hours. Guerra seeks to represent nursing department employees who have worked at any of the company’s 291 facilities dispersed throughout 27 states and have spent off-the-clock time complying with the dress code policy without compensation.

The company’s mandatory dress code policy required employees to purchase scrubs from one particular vendor and arrive to work in a clean, wrinkle-free uniform.

The facility lacked washers, dryers and other on-site equipment, which resulted in nurses spending off-the-clock time maintaining their uniforms. Guerra alleges that the company could send employees home without pay to change into a uniform that conformed with the dress code policy or even institute progressive disciplinary measures, including termination.

As such, Guerra states that she and many other nursing assistants spent two to three hours off-the-clock per week ensuring their uniforms met the company’s requirements, without pay.  Guerra accuses the company of knowing that its uniform policies resulted in a significant investment of time by its employees and failed to compensate employees for that overtime.

Guerra names HRC Manor Care’s human resources subsidiary, Heartland Employment Services LLC, as the defendant. This firm will continue to monitor the developments in this case.

THIRD CIRCUIT HOLDS THAT EX-TD AMERITRADE EMPLOYEE REQUIRED TO ARBITRATE WHISTLEBLOWER CLAIMS

Earlier this week, the Third Circuit Court of Appeals ruled that former TD Ameritrade employee, Boris Khazin, must arbitrate his whistleblower claims instead of suing in court. Khazin, who worked in the firm’s compliance group, sued TD Ameritrade for retaliating against him as a whistleblower when he complained about alleged securities law violations.

The issue before the court was whether Dodd-Frank’s ban on mandatory, pre-dispute arbitration agreements could be applied retroactively. Dodd-Frank was passed by Congress in 2010 in the wake of the financial crisis. In Khazin’s case, he signed an agreement in 2006, which stated that he was required to arbitrate employment-related claims through FINRA. The lower court compelled arbitration between TD Ameritrade, and Khazin subsequently appealed to the Third Circuit.

The Third Circuit refused to expand Dodd-Frank’s whistleblower protections beyond its technical reading, and thus, affirmed the lower court’s decision.

This issue was a matter of first impression in the U.S Court of Appeals for the Third Circuit. Other circuits have been split on this question.

REPAIR TECHNICIANS FOR GENERAL ELECTRIC GRANTED CONDITIONAL CERTIFICATION IN WAGE AND HOUR SUIT

Last month, a New Jersey District Court judge granted conditional certification in a wage and hour collective action brought by appliance repair technicians employed by General Electric. Thirteen plaintiffs, who service appliances in customer’s homes, filed the lawsuit and alleged that they were required to perform work, before and after their shift, without pay.

Specifically, plaintiffs claim that they were required to perform pre-shift work, such as logging on to their computer to retrieve a list of calls for the day, checking emails, ensuring that they have the necessary parts for their service calls and contacting customers to find out if they were home.

Plaintiffs additionally claim that they worked through lunch, even though pay for a 30-minute lunch break was automatically deducted, and they performed off-the-clock work at the end of each shift, such as answering emails, ordering parts and checking calls for the next day.

The judge ruled that plaintiffs provided sufficient evidence for conditional certification and that GE had a policy, either written or unwritten, that affected service technicians similarly. Thus far, approximately 100 workers have opted-in to this action.

This firm will continue to monitor the developments in this case.

NEW YORK HOME HEALTH AGENCY SETTLES FALSE CLAIMS ACT LAWSUIT FOR $35 MILLION

Last week, the Visiting Nurse Service of New York (“VNS”), a not-for-profit organization providing in-home care to New York residents, agreed to pay nearly $35 million to settle claims that it defrauded Medicaid by improperly billing ineligible patients for services at its adult day care facilities.

Specifically, VNS admitted to receiving $3,800 payments for 1,740 members in its long-term care plan who were referred by social adult care centers, or used the services at those facilities, but did not qualify for the program. Investigators also claimed that the services provided were substandard. Ultimately, these members were un-enrolled in August 2013.

VNS also admitted that in 2012 and 2013, various centers in its network did not provide services that qualified as personal care services under the terms of its Medicaid contract.

As part of its settlement terms, VNS is required to credential only social adult care centers that are equipped to provide care consistent with regulatory requirements and ensure that these centers will provide the care required under its long-term care plan.