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Working off the clock, intern labor emerge as hot topics in wage-and-hour issues

Working off the clock, intern labor emerge as hot topics in wage-and-hour issues

By John Glynn

At the end of their shift, employees at a West Coast warehouse undergo a security check to ensure they are not stealing merchandise. Should they be paid for the time it takes to go through that process?

Across the country in New York, employees entering a nuclear power plant want to be paid starting with the time it takes to go through security. Similarly, construction workers on a project inside a secure area of an airport believe they should be compensated for the time devoted to TSA security checks.

When the “clock” starts and stops for nonexempt workers under the federal Fair Labor Standards Act is emerging as one of the hottest legal topics in labor and employment law. An American Bar Association panel explored this issue, as well as labor law relating to interns and independent contractors as part of a 90-minute discussion, “Wage and Hour Law: Hot Topics and Best Practices”.

In the case of the workers, the U.S. Court of Appeals for the Ninth Circuit ruled that the employees should be paid because the security check was not integral and indispensable to their principal job and was done for the benefit of the employer to minimize thefts. In the other two cases, appellate courts ruled pay was not required because the rules were imposed by a third party and not for the benefit of the employer.

Panelist Aaron D. Kaufmann, an attorney for Leonard Carder LLP in San Francisco, said the question of whether time spent on security screening is compensational is one of several issues of pre- and post-shift activities now being litigated. Others would include “what constitutes (work) clothing” for certain jobs and use of work-related electronic devices off the job by nonexempt workers.

For these devices, like smartphones, Kaufmann suggested companies would be on better legal ground if they develop established policies, monitor compliance and impose discipline when necessary.

George L. Washington Jr., the in-house counsel for Orange Business Services in Oak Hill, Va., said another aspect of the FSLA emerging as a hot topic is the use of intern labor. In recent months, at least two cases have emerged in the Southern District of New York testing the parameters of what is known as U.S. Department of Labor Rule #71, which outlines a six-prong test to determine whether interns should be paid under the FSLA.

“You want a situation where things done by the interns would not have been done by a regular employee,” Washington said in providing general guidance to employers.

Janet M. Herold, the regional solicitor for the U.S. Department of Labor in San Francisco, said nationally DOL has an initiative underway to pursue cases against employers who misuse the label of “independent contractor.” The span of job categories is diverse, including tourist bus drivers, nurses, security guards and convenience store clerks.

“We have seen a clear uptick in the last decade of employers who classify employees incorrectly as independent contractors,” Herold said.  She added the DOL “goal is not to eliminate independent contractors” but to stop abuse of the categorization that allows employers to evade the FSLA as well as a variety of tax laws.

The panel was moderated by Julie A. Totten, a partner at Orrick, Herrington & Sutcliff LLP in Sacramento, Calif. She also led a discussion on recent court decisions affecting arbitration and class-action suits and how they might affect wage-and-hour claims.

While the rulings have generally sided with business interests, Totten observed that an aggressive attorney for individual plaintiffs might still put together a volume of arbitration complaints where the “cost of arbitration sometimes exceeds the actual value of the claims.”

The program was presented by the ABA Section of Labor and Employment Law and the ABA Center for Professional Development.

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