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Pittsburgh Employment Law Blog

2015 FLSA Litigation: On the Rise

During the last 15 years, wage and hour lawsuits filed in federal court have risen over 450%. According to the Judicial Resource Center, 8,781 Fair Labor Standards Act lawsuits were filed in 2015, which is a 7.6 percent increase from 2014. This year has seen new federal labor proposed regulations, the fight for higher minimum wage, an increased scrutiny on independent contractor classification and joint employer status. Experts believe these events, changes and public awareness have contributed to the rising onslaught of wage and hour suits. [1]


[1] http://www.bna.com/uptick-flsa-litigation-n57982064020/

Expansion of the Joint Employer-NLRB Browning-Ferris Decision

At the end of August, the National Labor Relations Board (NLRB) handed down a decision, departing dramatically from past precedent, ruling that companies may be held liable for labor violations conducted by their contractors and subject to joint collective bargaining agreements. This decision held that waste management company, Browning-Ferris Industries, who hired LeadPoint Staffing, to supply employees to a one of its recycling centers, is a joint employer and required to participate in collective bargaining along with LeadPoint.

Zannikos and the Fifth Circuit: Highly Compensated Oil Workers May be Exempt from the FLSA

Over the winter, our firm wrote an article about various FLSA exemptions and used the case of Zannikos v. Oil Inspections to illustrate the application of the highly compensated employee exemption. To summarize, in 2012, Vasilios Zannikos, on behalf of all similarly situated employees, filed suit in the United States District Court for the Southern District of Texas against his employer, Oil Inspections U.S.A. He alleged his employer failed to pay him overtime wages pursuant to the Fair Labor Standards Act. Oil Inspections U.S.A. specializes in loss control operations in connection with oil cargo transfers. Zannikos was employed as a marine superintendent. This job required the Plaintiff to monitor and observe oil transfer operations, ensuring they were performed accurately, legally and safely. Plaintiffs served as quality control by inspecting loading and discharge equipment, identifying problems with equipment, safety or calibration, and then recommending remedies to the customers or Oil Inspections. Oil Inspections responded to this suit by filing for summary judgment, alleging marine superintendents were exempt from the requirements of the FLSA because their some of their duties were administrative and they were highly compensated employees. Both parties moved for summary judgment. On January 30, 2014, the District Court entered an order that Vasilios Zannikos was exempt from the FLSA due to the fact he was highly compensated, however the court did not find marine superintendents to be administrative employees. Both parties filed appeals and the Fifth Circuit Court of Appeals affirmed this ruling. Zannikos v. Oil Inspections (U.S.A.), Inc., 14-20253, 2015 WL 1379882, at *1 (5th Cir. Mar. 27, 2015).

The New Overtime: Proposed Rules from the Department of Labor

On July 6, 2015, the Department of Labor (DOL) proposed a new set of requirements for workers who may receive overtime wages. The proposed rule expands the class of overtime eligible employees. The DOL's proposed rules are in direct response to President Obama's executive request to review and revise the current overtime regulations, which currently prevent certain classes of salaried workers from receiving overtime compensation. Specifically, Obama asked the DOL to reevaluate the salary threshold at which employers are no longer obligated to pay employees overtime.

Changes to the Gist of the Action Doctrine in Pennsylvania

Recently, the Pennsylvania Supreme Court, has issued a ruling which may grant tort claims for fraudulent contract performance. Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014). Pennsylvania courts have employed two methods to determine whether tort claims that accompany contract claims should be allowed as freestanding causes of action or rejected as impermissible attempts to recast a contract claim into a tort: the gist of the action doctrine and the economic loss doctrine. In theory, these are distinct doctrines under Pennsylvania law. From a practical perspective, the doctrines operate identically and share a common purpose: maintaining the separate spheres of contract and tort.[1] Historically, the economic loss doctrine evolved in the context of products liability cases, precluding tort recovery where the only injury is to the product itself, while the gist of the action has been applied more frequently in non-products liability cases.[2]

King v. Burwell: Affirming the Affordable Care Act

The controversial Affordable Care has caused debate and litigation since it was signed by the President in 2010. The Affordable Care Act embodies three reforms to overhaul the American healthcare system. First, the Act required guaranteed issue and community rating which requires health insurance providers to offer health insurance to offer health insurance policies to everyone within a given territory, without medical underwriting. Second, the Act issued a national mandate requiring individuals to maintain health insurance coverage, or pay a fine to the IRS. Lastly, the Act seeks to make healthcare more affordable through giving refundable tax credits to individuals with household incomes between 100% and 400% of the federal poverty line. The Act also requires the creation of an "Exchange" in each state which functions as a marketplace which allows individuals to shop for different insurance plans. The Act states that the federal government will establish an exchange if a state does not. The Act supplies that tax credits shall be allowed for any applicable tax payer, but only if the taxpayer has enrolled in an insurance plan through an exchange established by a state. An IRS regulation interprets that the language as making tax credits available on an exchange regardless of whether the exchange is established by a state or HHS. The ambiguities within the Act's language and the IRS's regulation caused confusion.

Paid Sick Leave: New Duties for Employers

In a current wave of legislation, states and cities across the country are passing laws and ordinances granting workers paid sick leave. Massachusetts, Connecticut, California and Washington have passed state wide laws permitting leave. Cities such as Philadelphia, Baltimore and nine New Jersey municipalities have enacted paid sick leave laws. Even many private companies, such as Chipotle have begun to enact paid sick leave policies for all types of workers. While some view these laws as a large step forward for American employees, others feel as though government is overstepping its bounds by dictating how employers treat employees. In response to many city ordinances granting this leave, some states have adopted preemption laws which prohibit localities from passing such laws.

Wellness Incentives and Employer Provided Healthcare Plans

Under the Affordable Care Act, employers who provide health benefits may use financial penalties and incentives to encourage staff to participate in wellness programs which seek to evaluate and encourage workers' healthy behaviors and other lifestyle choices. Programs which incentive workers to lose weight, quit smoking, eat healthy and partake in yearly health screenings, have become increasingly popular with the passage of the ACA in order for businesses to bring down healthcare costs for preventable conditions.

Department of Labor to Propose New Overtime Rules

The Executive Branch has pushed for the expansion of overtime availability. Last year, President Obama used his executive authority to trigger a review and revision of the current overtime rules, which currently prevent certain classes of salaried workers from receiving overtime compensation. Specifically, Obama asked the Department to reevaluate the salary threshold at which employers are no longer obligated to pay employees overtime. That weekly threshold has been $455 since 2004. A change in that threshold level could make low-level supervisors in retail, fast food, health care and other industries eligible for overtime pay.

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