Friday, July 3, 2015

Federal Appellate Court Rejects DOL Six-Factor Intern Test

In September 2013, two interns who had worked without pay on Fox Seachlight's Black Swan movie convinced a United States District Judge that they were actually employees and should have been paid. That judge based his ruling on a six-factor test that the U.S. Department of Labor derived from the Supreme Court's decision in Walling v. Portland Terminal Co., 330 U.S. 148 (1947):
  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;The intern is not necessarily entitled to a job at the conclusion of the internship;
  5. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
On July 2, 2015, the Second Circuit Court of Appeals reversed the ruling in Glatt v. Fox Searchlight Pictures, Inc., Case No. 13‐4478‐cv (2nd Cir. July 2, 2015). It rejected the Department of Labor text, and stated that decisions about whether interns are employees under the Fair Labor Standards Act rest on whether the intern or the employer is the primary beneficiary of the relationship. For guidance in cases to come, the court offered the following seven non‐exhaustive set of considerations:
  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Tuesday, June 23, 2015

Wal-Mart Pharmacist Class Action Survives Motion To Dismiss

Four Wal-Mart pharmacists have filed a putative class action asserting that they were not paid for all the time that they devoted to an immunization certification training course. According to their second amended complaint, Wal-Mart encouraged its pharmacists to take the certification course so that the company could make more money through the administration of immunizations at its stores. Although Wal-Mart paid the pharmacists for the time they spent in the course, it did not pay them for time spent studying at home or taking the certification test. United States District Judge Andrew Guilford denied Wal-Mart's motion to dismiss the complaint, because the course was directly related to the pharmacists' jobs and was not voluntary. The pharmacists' motion to certify the case as a class action is set to be heard on August 17, 2015.

The Department of Labor regulations define the circumstances under which compensation must be paid for lectures, meetings and training programs. Under 29 CFR sections 785.27- 785.32, time spent on such activities must be counted as working time unless (a) Attendance is outside of the employee's regular working hours; (b) Attendance is in fact voluntary; (c) The course, lecture, or meeting is not directly related to the employee's job; and (d) The employee does not perform any productive work during such attendance. An example of an application of the regulations to training city employees appears in  from the Department's Wage and Hour Division.
Opinion Letter FLSA2009-15

Airlines Targeted For Unpaid Work Before Takeoff

Virgin America and Jet Blue are defendants in separate lawsuits alleging that they do not pay their flight attendants for all the hours that they work. According to the complaints, the airlines, require the flight attendants to put in time on the ground getting ready for their flights, but do not start paying them until they are on board ready to go. The Virgin America complaint is available here, and the Jet Blue complaint here.

The standards for what are sometime called preparatory activities (or donning and doffing, when referring to uniforms or protective gear) differ under federal and California law:

Under California law, time spent on preparatory activities is compensable if the activity is compelled by the necessities of the employer's business and is not de minimis. The standard is explained in the following opinion letters from the Division of Labor Standards Enforcement: 1994.02.03-3, 1998-12-23, 1988-05-16.

Section 203(o) of the Fair Labor Standards Act excludes from work time "any time spent in changing clothes or washing at the beginning or end of each workday which was excluded from measured working time during the week involved by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee." In addition, the Portal-To-Portal Act provides in section 254 that employers are not liable under the FLSA for the following activities: "(1) walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and (2) activities which are preliminary to or postliminary to said principal activity or activities, which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities," unless there is a contrary agreement or custom and practice. The effect of those provisions and of Supreme Court interpretations is discussed in Wage and Hour Advisory Memorandum 2006-2.

Sunday, June 14, 2015

Personality Testing

Time Magazine has a cover story this week entitled "How High Is Your XQ?" which describes the current interest among employers in the use of personality tests to make hiring, promotion and termination decisions. The answers to test questions are supposed to reveal personalty traits that are correlated with success on the job. You may hear the area referred to as "people analytics." The providers of such testing include Hogan Assessment, Caliper, Prophecy Healthcare, Pegged Software, Gallup's StrengthFinder, and Infor.

Testing raises legal issues that employers need to be aware of before they put people analytics into practice:

Reasonable accommodation: The disability laws require employers to provide reasonable accommodations during the hiring process, to make sure that applicants are not screened out because of an inability to perform tasks that are not essential functions of the job. The EEOC's guidance on "Job Applicants and the Americans with Disabilities Act" gives this example: "An employer gives a written test to learn about an applicant's knowledge of marketing trends. Maria is blind and requests that the test be given to her in braille. An individual's knowledge of marketing trends is critical to this job, but the employer can test Maria's knowledge by giving her the test in braille. Alternatively, the employer could explore other testing formats with Maria to determine if they would be effective, for example, providing a reader or a computer version of the test."

Disparate impact: Testing may exclude people with certain protected characteristics, This is referred to as disparate impact. For example, in Griggs v. Duke Power Co., 401 U.S. 424 (1971) (the Supreme Court's seminal case on disparate impact), the employer's requirement that applicants have a high school diploma and submit to an intelligence test excluded a disproportionate number off African American applicants from consideration. Where a disparate impact on those with a protected characteristic is shown, the employer must that the testing is job-related and consistent with business necessity. Even if the employer can make that showing, the testing may still be unlawful if the employees can show that there is a less discriminatory alternative. The process for determining whether a test is job-related and consistent with business necessity is called validation. A group of federal agencies (including the EEOC) has developed Uniform Guidelines on Employee  Selection Procedures for use in making sure that testing has sufficient validity to survive scrutiny under the discrimination laws. For a discussion of applying the guidelines to Prophecy, see Legal Defensibility of the Prophecy Assessment, from Biddle Consulting (one of the partners in the development of Prophecy). For further information, see also the EEOC's fact sheet on "Employment Tests and Selection Procedures."

Friday, June 12, 2015

Management of PAGA Litigation after Iskanian

In Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), the California Supreme Court ruled that claims to enforce civil penalties under the Private Attorneys General Act (PAGA), were not waivable, and refused to enforce a predispute agreement to arbitrate that purported to impose such a waiver. (Class action waivers must be enforced under AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011).) In the wage of Iskanian, the trial courts have routinely severed and retained PAGA claims, while ordering non PAGA claims to arbitration.

In Williams v. Superior Court (Pinkerton), Case No. B261007 (Cal. Ct. App. June 9, 2015), the employee's complaint asserted a single representative PAGA claim. The trial court ordered the underlying dispute over whether there had been a Labor Code violation to arbitration. The Second District Court of Appeal reversed the order as contrary to Iskanian. "[W]e conclude that petitioner’s single cause of action under PAGA cannot be split into an arbitrable 'individual claim' and a nonarbitrable representative claim."

Hence, employees who are willing to forego any individual recovery and be content with a percentage of the civil penalties under PAGA may avoid arbitration.