The Employer’s Wage and Hour Advisor

On August 23, 2024, the Fifth Circuit struck down the U.S. Department of Labor’s (“DOL”) “80/20” rule on how tipped employees must be paid under the Fair Labor Standards Act (“FLSA”). This is welcomed news for employers in the restaurant and hospitality sectors as navigating this complex rule can be challenging. However, employers should beware that there are a growing number of states that have done away with the tip credit entirely and require full minimum wage payments for all work.

Filings under California’s Private Attorneys General Act (“PAGA”) hit an all-time high in 2023, with 7,780 PAGA notices filed with the California Department of Industrial Relations.  As an attempt to rein in the tidal wave of PAGA litigation, the California legislature and Governor Newsom enacted employer-friendly amendments to PAGA amid the looming threat of a November 2024 ballot initiative that, if approved, would have largely repealed PAGA.

On May 16, 2024, the U.S. Department of Labor (“DOL”) reminded employers that they must remain in compliance with federal labor standards as employers adopt artificial intelligence or other automated systems to streamline Human Resources functions in the workplace. The DOL outlined several artificial intelligence guidelines (“AI Guidelines”) to provide employers that create and deploy artificial intelligence (“AI”) with guidance for designing and implementing these emerging technologies in ways that enhance job quality and protect workers’ rights.

Wonder Bread, Butterscotch Krimpets, and Jumbo Honey Buns were featured in a recent unanimous decision by the Supreme Court of the United States. But delicious baked goods were not the order of the day—rather, the Court held that a transportation worker does not need to work in the transportation industry in order to be exempt from arbitrating their disputes under the Federal Arbitration Act (FAA). So, a distributor who transports Wonder Bread, Butterscotch Krimpets, and Jumbo Honey Buns also cannot be compelled to arbitrate their claims under the FAA. 

The U.S. Department of Labor (“DOL”) recently published amendments to narrow the Class Prohibited Transaction Exemption (PTE), also known as the qualified professional asset manager (“QPAM”) Exemption. The exemption allows QPAMs to manage multiple investments, notwithstanding general prohibitions under the Employee Retirement Income Security Act (“ERISA”). Under the amendments, QPAMs are ineligible for the exemption if they committed certain criminal conduct. The DOL also requires QPAMs to be more transparent by changing reporting and administrative duties. The effective date of this new amendment is July 17, 2024.

Michigan historically has been at the forefront of labor law changes. This remains the case with the implementation and recent repeal of Michigan’s right-to-work legislation. Michigan workplaces are no longer governed by a “right-to-work” law, as the repeal took effect on February 13, 2024. Once again employees can be required to join a union to keep their jobs. Employers and employees alike question what effects this repeal may have on the relationship between labor unions and Michigan employers.

The U.S. Department of Labor (“DOL”) is poised to make significant changes this year to various wage-and-hour regulations interpreting the Fair Labor Standards Act (“FLSA”). The changes are expansive and include both the already released independent-contractor test and increases to the salary threshold for white collar exemptions. These changes will effect employers across the country in all industries. Nonetheless, they are not going unchallenged. The expected legal challenges to the changes have already begun and will likely continue to mount.

Large multi-state collective actions continue to be filed under the federal Fair Labor Standards Act (“FLSA”). In addition, with the increase of remote work, more and more employers are employing workers outside of the companies’ home states. This has resulted in relatively new questions about the reach of a court’s jurisdiction over out of state employers. For example, if a Michigan employee sues a New York employer for overtime in Michigan, can other employees located outside of Michigan join the lawsuit? Does the Michigan federal district court have personal jurisdiction over out of state employees when the employer is located in New York? The federal Circuit Courts of Appeals are divided on the issue. 

Introduction

In a world where a $105M settlement of an independent contractor misclassification lawsuit[i] is just another 9-figure headline, businesses cannot afford to take independent contractor misclassification risks lightly. The landscape surrounding the classification of employees versus independent contractors is continually evolving. This moving target poses a challenge for businesses throughout the United States and especially those operating in multiple states.

All employers—and not just union employers—beware: On August 2, 2023, in the long-awaited Stericycle Inc. decision, the National Labor Relations Board (the “NLRB” or the “Board”) announced a return to the detailed analysis of work rules on August 2, 2023. This decision has significant impact on all employee handbooks and other workplace rules as the Board returns to the Obama-era standard set forth in Lutheran Heritage, with a slight modification. The Stericycle standard now asks whether “a challenged rule has a reasonable tendency to chill employees from exercising  their Section 7 rights,” looking at the rule from the perspective of an employee who is not only subject to the rule, but also economically depending on the employer. If so, the rule is considered presumptively unlawful.