Fair Labor Standards Act

Issues

The Fair Labor Standards Act of 1938 (“FLSA”) requires employers to pay employees one-and-a-half times their normal wages for any time worked over forty hours in a given week, but exempts “outside salesmen” from this overtime pay requirement. Respondent GlaxoSmithKline (“GSK”) refused to pay overtime to petitioners Michael Christopher and Frank Buchanan, whom it employed as pharmaceutical sales representatives, because it considered them to be “outside salesmen.” Christopher and Buchanan sued, arguing that they were not “outside salesmen” under the Secretary of Labor’s interpretation. The Supreme Court will determine whether that interpretation is entitled to deference and whether Christopher and Buchanan are subject to the FLSA’s outside salesman exemption.

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This case asks for the Supreme Court to decide which standard of proof applies when an employer asserts an FLSA exemption as an affirmative defense from liability: preponderance of the evidence or clear and convincing evidence. Petitioners, E.M.D. Sales, Inc., et al. (“E.M.D.”), argue that the clear and convincing evidence standard applies only in limited circumstances, not to mere monetary disputes between private parties. Further, E.M.D. asserts that the risk of erroneous decision is equal between the parties. Respondents Faustino Sanchez Carrera et al. (“Carrera”), argue that a clear and convincing evidence standard applies because the FLSA protects important interests. Further, Carrera argues the clear and convincing evidence standard is necessary to allocate the unequal risks among employers and employees. The outcome of this case has serious implications for labor law.

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The issue in this case involves whether the Fair Labor Standards Act’s (“FLSA”) overtime-pay exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles,” contained in 29 U.S.C. § 213(b)(10)(A), also exempts service advisors. Encino Motorcars argues that the plain language and structure of § 213(b)(10)(A) unambiguously exempt service advisors from the FLSA’s overtime requirements. Navarro argues that the plain language and structure of § 213(b)(10)(A) clearly do not exempt service advisors from the FLSA’s overtime requirements and that Congress’s intent in enacting the exemption and the FLSA as a whole support this interpretation. From a policy perspective, this case is significant because a decision favoring Navarro could force dealerships across the United States to alter their payment systems for service advisors, of which there are around 100,000. Such an outcome could also expose dealerships to retroactive liability and back-pay in order to settle FLSA claims concerning overtime. 

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This case asks the Supreme Court to clarify whether automotive “service advisors” qualify for the Fair Labor Standards Act’s (“FLSA”) mandatory overtime pay requirements. Encino Motorcars, LLC, a Mercedes-Benz dealership in California, contends that these employees are primarily “servicem[e]n . . . engaged in . . . servicing automobiles” and thus they are clearly captured within the law’s exceptions. Similarly, Encino argues that even if the statute is sufficiently ambiguous on the matter, the Department of Labor’s interpretation of the statute is unreasonable and unentitled to judicial deference. Hector Navarro and other employees assert that construing the statute’s exception to include service advisors would violate the text, spirit, and purpose of the FLSA. Relatedly, they maintain that the Department’s interpretation is entirely reasonable and thereby warrants deference from the Court. The Supreme Court’s resolution of this case could affect the terms of employment between America’s 45,000 service advisors and their employers. 

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In a putative collective action, Laura Symczyk alleged that Genesis HealthCare Corporation violated the Fair Labor Standards Act by automatically deducting break time from her and other employees’ pay, regardless of whether they performed compensable work during their breaks. Before any other plaintiffs joined the action, Genesis made an offer of judgment for full relief of Symczyk’s claims. Symczyk did not accept the offer, but the district court dismissed the case because the offer of judgment left Symczyk without a personal stake in the litigation. Symczyk argues that she continues to have a personal stake and that the interests of plaintiffs yet to join the action creates jurisdiction. Genesis argues that a complete offer to satisfy a lone plaintiff’s claim renders the case moot. In resolving the question presented, the Supreme Court will decide whether an unaccepted offer of judgment can render a case moot and whether courts may consider the interests of unnamed, hypothetical parties in determining whether the parties have a personal stake in the litigation. The decision will affect collective-action trial practices for both plaintiffs and defendants, including plaintiffs’ use of the discovery process to join class members and defendants’ use of individual offers of judgment to forestall or avoid collective actions.

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This case asks the Supreme Court to clarify whether highly compensated white-collar employees must meet the requirements of 29 C.F.R. § 541.604 to be exempt from overtime pay. To be exempt from overtime pay, 29 C.F.R. § 541.604 requires that employees receive certain minimum weekly guarantees and that a reasonable relationship exist between the guaranteed amount and amount actually earned. Helix argues that incorporating 29 C.F.R. § 541.604 into the Fair Labor Standards Act’s highly compensated employee exception goes against the text and regulatory history of the highly compensated employee exemption regulation and unnecessarily complicates the exemption process. Hewitt counters that 29 C.F.R § 541.604 has been embraced in the text and practice of highly compensated employee exemption regulation and that it encourages employers to improve welfare and increase job slots. The outcome of this case has significant implications for the oil, gas, and nursing industries, as well as their employees’ job markets.

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Under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. ("FLSA"), as amended by the Portal-to-Portal Act, 29 U.S.C. §§ 251-262 ("Portal Act"), an employee must be compensated for the time their employer requires them to spend donning and doffing protective gear. In the combined oral argument for Tum v. Barber Foods, Inc. and IBP, Inc. v. Alvarez, the Supreme Court will consider an important related question—whether an employee is also entitled to compensation for time spent waiting at stations where required safety and health equipment is distributed, donned, and doffed, and traveling to and from these stations to work sites at the beginning and end of each workday.

Under the FLSA, employers must compensate employees for activities performed during the workday. However, the Portal Act, which amended the FLSA, removed employers' obligation to compensate employees for two categories of activities performed outside the workday. These activities include: "(1) walking, riding, or traveling to and from the actual place of performance of the principal activity, and (2) activities which are preliminary or postliminary to said principal activity or activities." Tum and Alvarez ("Employees") contend that walking and waiting at safety stations are inextricably linked to the donning and doffing process, and are principal activities that demark the beginning and end of the workday. The Employees also argue that these activities occur within the workday, and thus, the above Portal Act exceptions are inapplicable. Public policy considerations, such as employee safety, financial welfare, and corporate profitability will figure prominently in the Supreme Court's resolution of these conflicting appellate court rulings. The outcome will also profoundly impact workers' salaries, manufacturing costs, and corporate outsourcing policy.

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Petitioner Kevin Kasten sued his employer, Saint-Gobain Performance Plastics, Corp., alleging that Saint-Gobain terminated his employment in retaliation for his oral complaints regarding the location of the company's time clocks. Kasten alleges that Section 215(a)(3) of the Fair Labor Standards Act protects employees who make oral complaints from employer retaliation. However, Saint-Gobain asserts that Section 215(a)(3) only protects written complaints made to governmental authorities. The Seventh Circuit held that Section 215(a)(3) only protects written employee complaints. The Supreme Court’s decision will affect several aspects of the employer-employee relationship, including informal dispute resolution procedures in the workplace and employees’ abilities to raise their grievances without fear of retaliation.

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The Fair Labor Standards Act sets the minimum wage and other mandatory benefits for workers. Homecare workers such as babysitters and companions to the elderly are exempt from its provisions when employed directly for the family they work for, but what about when they are employed by a third party provider of such services? After following a notice-and-comment rulemaking procedure the Department of Labor said, in 29 C.F.R. § 552.109(a) under the heading “interpretations,” that such third-party employed workers are exempt from the minimum wage requirement. Coke, a homecare worker employed by third-party provider Long Island Care at Home, brought suit questioning the validity of § 109(a). The Second Circuit Court of Appeals held the regulation was unenforceable. The United States Supreme Court now takes up the question of whether the Second Circuit gave the proper amount of deference to the Department of Labor’s stance on the regulation in question.

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